SrRealist

So the other day i inserted my 8gb sd card to my i897, it said the card was damaged and may require formatting. this didnt bother me cause all the files on there were music that i could easily recover from my external HDD. i formatted and lo and behold, it erased the phones internal storage. luckily, it saved all my present data to the ROM (MIUI) and all my apps and settings were saved. my question is why this happened and how can i avoid it in the future?

my only real concern at this point is this: if i need to, for one reason or another, wipe data/factory reset will it be able to do so? if not, where can i find the necessary files to put back on my phone to allow that to happen?