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Hmmmmm..Does sound like the click of death for your hard drive but it is concerning that you Win 7 disks do not load as booting from those doesnt really involve the drive until it comes to writing the OS back. Are you sure it is actually trying to boot from the CD/DVD??Have you tried booting into safe mode or any other mode - hitting F8 at at start (after BIOS) should bring you up a menu - I suspect it wont work but worth a shot.
It may but you have nothing to lose by trying the Win 7 disk on the new blank drive. If it fails and asks for an OS to update then try your restore disks first.If your restore disks (latest Win 7) are full backups thne you could just try them - if it is it will give you a working PC - an image of it when you did the backup.Have you got the new HDD in the lappie??
If you have the option download & burn a linux live cd (systemrescuecd or knoppixz) for example & try booting from that. Alternatively you could look in tesco/whsmith for a linux mag with live media includedDon't be scared of this, linux can be just as pointy-clicky as windows if thats what you need :)ps - Always a good idea to have a live cd handy. If windows gets itself stuffed up, at least you can get your stuff off before reinstalling !
Hmm - I would suspect that something else is wrong with your laptop. Booting from Linux or Windows CDs doesn't involve the HDD at all (until installation) so even if you have no HDD at all your lappie should boot. Are you complete sure you are booting form the CD drive - can you see the drive light engaged and hear it spinning up? Is it enabled as a boot device in the BIOS and are you bypassing booting from the HDD at startup. You need to press esc to get a boot option list on your Asus laptop.Your HDD may be dead but it seems that something else is amiss...