Just a little update (take a deep breath):
I've figured out why the new HD doesn't work. The access mode in BIOS needs to be set at "Large" instead of "Auto" for reasons beyond me. I tried this and the HD was finally recognized. Unfortunately, at this point I had already formatted the HD trying to install XP from scratch.
So I decided to get my old HD working again and hopefully be able to clone it. The Windows Installer popups I was getting was an old version, so I had to update it at microsoft. This enabled it to tell me that it had been trying to access Adobe Acrobat Pro all along, and was searching for the CD. However, I no longer have the CD, I convert most of my stuff to ISO (what else is a 500g HD good for?). My daemon tools didn't work after the repair install due to SPTD being old/nonexistant. So I reinstalled that, got my adobe ISO loaded up, and erased that problem.
Keep in mind that the Windows Installer had been popping up upon EVERY action and hanging the system up for 1-2 mins (drove me out of my d**n mind).
I then did all my windows updates, including IE 7. Big mistake. After rebooting, it would get stuck on "Setting Personalized Settings for: Internet Explorer." I restarted in safe mode, disabled IE through Control Panel - Windows Components, which fixed the problem. (Booting normally, IE7 works fine, which is a mystery to me since I unchecked it in safe mode.)
So, the old HD seems to be working fine again (minus the SMART failure) so I am back at square one, using Acronis Home Trial to clone the HD, this time with the BIOS set to "Large" for the new HD from the start.
Wish me luck.