Deschanel and Ward first met on the set of the film The Go-Getter, in which she had a starring role. They sang a duet together.
Deschanel had done years' worth of home demos. After meeting M. Ward she decided to send them to him. Ward called her a short time later, telling her that he would like to record her songs properly, and the band She & Him was formed.
By the way, both LPs are available as as a very nice vinyl edition.
Songs for a lonely island
Volume One: Sentimental Heart, This Is Not a Test, Sweet Darlin'
Volume Two: Thieves, In the Sun, Lingering Still, Don't Look Back
Finally, a video for the song "Don't Look Back":