Yes, I think that’s correct. With my limited experience on my wife’s iMac, I remembered thinking along the same lines as your post.
A more-trouble-than-it’s-worth work-around would be to move everything that you do not want to permanently delete out of the Trash to a regular temporary folder, empty the Trash, then move those files from the temp folder back in.
Alternatively, you may be able to do it from the command-line in the Terminal application.
I’m pretty sure it’s not possible to delete the trash folder from your computer. And you’re using Windows Vista, not Mac OS X, so it’s not really relevant to this thread anyway.
But as a guess, I’d say you probably just disabled the "show trash can on desktop" feature, and you can probably still see the trash can (or rather, the recycle bin) in the My Computer / Windows Explorer program.