tom23 to delete a user, visit their profile (click their username from the user list in admin panel or from one of their posts), click the "Controls" dropdown menu at the top right and select "Delete".
As the warning message will say, this action does not delete the user's content, only their account/profile. If you wish to delete their posts, you need to do it first. Afterwards there will be no way to find which posts belonged to that account.
I can't provide legal advice, but I believe in Europe at least, the users must have a way to have their personal data removed. I don't think it's legally required to be automated, you can ask your users to submit a written request and take care of it manually. What kind of data the user can request to be deleted and what the maximum delays to comply are will depend on the local regulation and your terms of use.
