ok, so the end result is a replacement drive allowed you to get the machine back up. Were there any issues with transferring data? Did you use the same cables to connect the new drive? Same ports? I am curious about this, as there doesn't seem to be a unified conclusion about what the cause of this is.
I would get the manufacturer specific disk tools and run some tests on the other drive.
I was all very hit-and-miss. After the windows re-install failed I could only boot to setup, as when it progressed to the welcome screen part of setup it crashed and a reboot just led to it starting again.
That obviously meant I could no longer fix it, because I could not get to any sort of UI.
It was very hit and miss trying to take stuff off the buggered drive. After I plugged in a second drive, installed XP and booted from it, It couldn't see the buggered drive at all. It turned out that it was seeing it as RAW rather than FAT32 or NTFS.
Eventually, for no apparent reason, it was able to read the drive as though there was nothing wrong, and I was able to access it and take what I pleased from it as though it was a standard drive. Yet when I tried to boot from it, it went to XP setup.
I don't know what caused it, but if it happens all I can surmise is that there is no damage to files or hardware and you can simply take off whatever you need and start afresh. Looking around the internet there is no fix, and when somebody has a solution it doesn't work for lots of other people. Evidently there are a lot of causes and there is nothing you can do about it really.