Inspiron 1545 Diagnostic Failure

I have someone with an Inspiron 1545 that won't run the diagnostic. When I choose Diagnostics" from the "F12" menu, it goes through its usual Pre-Boot Assessment and does not appear to find any errors or issues. At the end of that, I get the usual message "Booting Dell Diagnostic Utility Partition. Press any key to continue." When I hit a key, it does not proceed to the diagnostic menu. Rather, the cursor moves to the top of the screen and I get the message "Remove disks or other media. Press any key to restart".

And that's as far as I get. If I hit a key to restart, the message just reappears. All I can do is a hard reboot..

Any ideas what the cause is? Bad HD? Bad something else? I can't boot into Windows which was the original problem. I was planning on doing a full recovery anyway, but I don't want to waste time doing that if there's a hardware problem.

Any input would be greatly appreciated. Thank you in advance.