it's sounding like either something is shorting out when you insert the hard drive, the drive is defective, or the connection on the laptop is defective (could also cause shorting out). only things I can suggest at this point:
-You said the drive is IDE. Check the pins to make sure none of them have been bent or pushed in (could cause a short or it won't be found while POSTing)
-Make sure the hard drive is firmly and fully installed into the laptop (prior to boot, of course)
-If you have an external adapter for hard drives (either an enclosure, dock, or other USB device), try hooking the drive up to that device and make sure it works
If all else fails, return the drive (preferably exchange it for a new, boxed, working unit)...