A software-integrated disposable kit contains a series of sterile packages which hold instrumented surgical tools, surgical accessories, user input computer controlling peripherals (e.g. mouse, keyboard), markers, and a one time use digital medium. When image guided surgery is to be performed, the digital medium is inserted into the computer and the user interface is displayed. The digital medium stores a portion of the software which, in combination with software on the computer, provides all of the software necessary for full user functionality (e.g. display diagnostic image information, tracking surgical instruments, superimposition of surgical tools). At the end of a surgical procedure, the digital medium is deactivated or encrypted and the used surgical tools are then disposed of without reuse. The system allows the user to save relevant information obtained from the surgery (e.g. images, notes) on the digital medium which is encrypted against reuse and archived.