the OS not working i would understand, if it was installed with different hardware it would not be usable, but it shouldn't give you that error... there's a long list of others you should have encountered.
Is there any way you could post a picture of the pin connectors on the hard drive? and/or the plug in the laptop. If they were bent or corroded it could prevent the drive from being read properly.
also can you enter bios before it gives you the error? if so check to see if it recognizes the drive, it isn't an answer yet, but it will limit the options i have left to give
*There are many things that can be tried if there is a way to get the cd drive to work at the same time the hdd is in.