I requested hubby to put in the old hdd - got the same message. I rebooted and went to BIOS did a diagnostic on hdd - failed 7% readable. I have 2 computers, desktop and the non working netbook - where exactly would I put the hp drive to work on it - new territory for me. I remembered doing the BIOS diagnostic on the netbook hdd which made me believe that HP was right about needing a new hdd for netbook.
Remember when in dos I did a diskpart and got "bad command" and dir shows only what is on the usb. Did come up with another solution - buy a 32GB usb, then all the recovery files along with the image data I got from HP will fit.