So... where did he save his files?? Network drive?
I just fired up sheepsaver to check: in the olden days of mac the desktop appeared to be the root of the filesystem, so the hard drive was just one level inside the desktop.
Files from a volume still knew where which folder they were supposed to go in on that volume - if you dragged them to the desktop to work with, the "Put Away" menu command would put them back there (sadly lost in OS X). If you ejected a disk that had working files on the desktop they'd vanish, of course.