These posts have really rambled on. The short approach is to make sure the hard drive is jumpered correctly and that it is seen in the BIOS. If not, that has to be dealt with.
Then boot with a Windows CD, delete ALL partitions, create one, format it and try to install.
If that doesn't work post the exact problem. It may well be that the hard drive is kaput. (That was the reason you were given the machine initially, yes?)
I think we are making this harder than it has to be unless I missed something.