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The bitcoin isn't stored on the harddrive, it's on the bitcoin blockchain, but he stored the key needed to access it on only that one harddrive. Without that no-one can access it.
That makes a lot more sense. Presumably you can back up the key however you like to avoid situations like this?
Absolutely, but do mske sure the backups are secure, anyone with access to them can move those bitcoins.
You can. However, it's easy to not bother, particularly when bit coin were a few pence each. Now the price is sky high, it's suddenly worth millions.
So TLDR, he stored the password or an equivalent to the password on a hard drive, and this password is needed to access the Bitcoin