I dont think a failed HDD will give this indicator. If the
HDD was dead you would get a "Non System Disk" error
messaee generally.
Go into you BIOS (Hti DEL key at memory test) or use the
manufacturer method.
Make sure that the computer sees the CD , HDD, and Floppy
drive. Snoop around to find it but don't save changes. If
it is there then you probably have a corrupted drive.
Go back to the BIOS and change the PC to boot off the
Windows CD or the Recovary CD. Make sure to Format the
new drive upon installation. This will wipe your data but
at least you are up and running. If you have a second PC
and know a bit about hardware install the suspect in the
other machine as a slave to the primary drive and see if
you can view the volumes there.
After you are back up and running load a anti-virus
program. Best bet is you got a boot sector virus or
somthing that corrupted your PC.