If you are not happy with the Apple diagnostics...
1) Also make sure the Gold Ribbon harness cable is not damaged, I have seen them simply go bad
2) Next step, remove the drive (and carefully remove the Cable assembly); now use a Laptop IDE/PATA to Desktop PATA adapter and run a Manufacturer's HD from on a PC;
Note: even if you cannot "see" the HD on your PC you can still run a full 4 Hour Diag. This will not damage the data on the drive as long as you use a normal extended test which is non-destructive (like the WD Diags); By the way, the Western Digital Lifeguard diagnostics will test all branded Hard drives (NOT just Western Digitals) and it will do SATA, PATA, Notebook, and Desktop HDs. we use Version 1.24 on all our testing servers