ZP and Fujitsu HDD

I have been trying to fix my nieces Fujitsu Lifebook Model A6250. The problem is that it hangs just after installing the avgrkx86.sys and then it goes to the BSOD. I've tried to run the repair console and numerous other applications but the OS just reports there is no C drive. I've run Fujitsu's disk diags and can see the disk the whole disk and all partitions and files, but am unable to get the OS to load. i updated the bios, and have tried to do an install of XP sp2. Everything is fine until it gets to the "Press R to repair or hit enter". Has anyone seen this before? The hard drive is the Fujitsu MHW2110BM SATA drive. Thanks.