I am currently working on a PC with this exact same issue.   The PC I am working on had a boatload of virus's and spyware on it, then the user tried to update to XP SP2.   The problem is that when it comes to updates, they assume a clean system (because it is not like they will have compatibility updates for the virus's and Spyware that are on your Pc).  So a PC with virus's and spyware, a update can hose the machine.   

Anyhow, Here is what to do...

First, Run Scan Disk,

This is assuming you have connected it to a 2nd PC that is working
Open My Computer, Right Click on the Drive , then go to Properties.  Then go to the Tools Tab and under Error Checking, Click on "Check Now"

Then make sure you run a complete Virus scan on that drive.   Once you are done with that, run another Scan Disk then stick it back into the original PC and do a repair install (you will need the Windows Disk to do that).

Well, I thout I fixed it. It worked fine on second PC I was able to boot windows from it, but when I transfered it to original PC it didn't work there, i tried repairing thing again,  but windows couldn't find any hard drives, I think that there was some special driver like RAID or something  end set up delited it I don't know what should I do, flushed BIOS or install some drivers. I tride downloading some, and put them on a Floppy, but it doesn't want taking it saying,  it's not system disk, can someone give me a clue on what to do?

 Thanks a lot everyone.

Connected via SATA cable, powered via legacy connection. HD's fine, it works great on second PC. I have MSI KT6V MS-7021 motherboard and WD800J HD. I searched the net, and there are a lot of bad things written about this HD, and a lot of undetecting for this HD and this same motherboard, but mostly for newly installed HD.  But my worked fine till what ever happened to it.  I do not see it in BIOS under first entry choice (what is it CMOS setting or some thing) , but  it there in BOOT sequence (boot numbers choice), and when i booting PC I can see it there in booting log under Serial  Ch0 WD800something.

this is the same problem.   As I suspected, it is is a bad hard drive.   There is no fixing it.  You can continue to try and reinstall windows but it will do no good.  You will still experience random problems such as the one you described.   And they will start to happen more and more often.   Whats happening is the hard drive is having internal issues (could be issues spinning), so there is no fixing it.   

I'm afraid that you will have to bite the bullet and go and purchase a new drive.  they aren't too expensive.