First, Windows Home Server doesn't use RAID. Duplication simply stores two copies of files in shares flagged to be duplicated on separate hard drives, so that your files won't be lost if a single hard drive fails. In your case, you seem to have two hard
drives fail; it's almost certain that you will lose some data, and possibly quite a lot.
The general method of recovering from a failed DATA drive is to remove the drive physically, replace it, add the new drive to server storage, and let Windows Home Server sort things out. If the failed drive is your system drive, you should replace the drive
and then follow the procedures in the documentation you received with your server to perform a server recovery (not a factory reset). With multiple failed drives, one of which is the system drive, I would pull the system drive and the other
failed drive at the same time, replace the system drive, and go through the server recovery process. After that completes (it can take a very long time if you have a lot of data, possibly a couple of days), worry about installing a new drive to replace the
other one that failed.
You should also read
this FAQ, with the understanding that you have a much higher probability of losing data, even data in duplicated shares. And you will almost certainly lose your backup database.
I'm not on the WHS team, I just post a lot. :)
