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Yeah, I realized after a little more shopping that I could find much cheaper hard drives, but I have seen some great desktop deals in the past few days (<$300) for systems that would be a pretty solid upgrade over my current system. Plus I don't have any assurance that a new HD will fix my problem.
As long as your happy you are not being ripped off!
Yes it could be a number of things that causes those symptoms, eg, power supply, hard drive cable, the port for the hard drive on the motherboard and so on. If you can afford the new one go for it.
If you get Vista, make damn sure you get 2GB RAM with it, or at the very least 1GB with the ability to upgrade to 2GB. If you want all the flash graphics features you will also need to make sure that the video card is separate and not part of the motherboard and that the video card has 256MB RAM and preferably has DX10 support.
Llogg, aside from the machine failing to load Windows, you've been able to boot from CD and run diagnostics, etc. so I think you can feel pretty confident that the drive is your problem. Still, I have to agree that new systems are pretty attractive. Just don't do a bottom of the barrel system. If it fits your budget, you can spend around $500 and get some pretty nice hardware. HP/Compaq and Acer deliver systems with good specs and top-quality components (including monitors) in this range. Dell, well, Dell is on the road to recovery, but I still wouldn't buy one. In the low-price market, I sell a fair number of Acers (my personal favorite here) and HP's. These days, as a system builder, I don't even think about delivering a custom system under the high end, unless it's to a business who is willing to pay a premium for service. Trust me, though, you won't be happy with the cheapest of the cheap.