Since this is a laptop, I would follow vendor's instructions to remove the hard drive, then just reseat it.
You might try the puppy linux boot disk. It doesn't need or use Windows at all,
It won't even care about the hard drive -- but if there is a hardware problem with the drive itself you will not be able to "mount" that drive using Puppy Linux -- and that would be pretty good proof that the problem lies with the drive itself.
If you can mount the drive using Linux -- you may atleast be able to recover personal files.
You ca also buy an IDE to USB converter and try loading the drive as an external drive on another computer for recovery purposes.
http://www.newegg.com/Product/Produc...82E16812232002
Beyond this you should be talking further to Dell -- as it appears to be a hardware problem -- but they may want you to take further actions to confirm that.
If the system is under warranty you should ask for the problem to be "escalated" and get a more senior representative to talk to.
The fact that your install disk is not loading may do so. I don't know whether your Laptop has a hidden recovery partition -- but if it does they may want to instruct you on how to use that for a full recovery -- although this will probably result in data destruction.
Other than using an install disk -- you may have the "repair my computer" as a preinstalled option on an F8 boot Window. Can you access that?
See the "pre-installed" description here >>
http://vistasupport.mvps.org/windows...ir_options.htm
If so, try both "Startup repair" and if that fails -- try opening the command line interface and using bootrec.exe