Inspiron 8600 Problem

I apologize if this is in the wrong thread, but this is my first post on here. I am having a difficult time diagnosing the culprit that is causing my laptop failure. I was on-line when the computer took a spill off the table. The notebook shut off. When I tried to restart it, it said gave me a message that said drive not recognized, press ctrl-alt-del to continue. This just reboots the system & puts me back to the same screen. The diagnostic tests showed a DST failure. Someone told me my hard drive may have crashed because of the fall. We replaced it with a new one. The operating software only loads as far as the screen where you enter your name & then it gives my a blue screen with an error message, a few paragraphs about BIOS settings & said it has to delete all info on the hard drive & try again if this is the first time you received this message. We tried a reboot of the OS disc a few times. It seems to fail around the same spot. We tried to re-install the OS on the old hard drive & that crashed at around the same spots as well. You can get into the old hard drive & see stuff is still on there, but when you try to repair the drive, it said it could not create some folder on the drive (something with 32 in the folder's name). I've had my guy look at a few different things, but this is out of his region. He's convinced it's some sort of hardware issue, but what we're not sure. Anyone got any suggestions or heard similar incidents, please let me know. Any help is much appreciated at this point. Inspiron 8600 // 80 gig hard drive // 512 mb ram