Circle Slash at Startup

Approx two months ago I did a clean install of Lion on my Intel iMac due to some general bugginess and slowness. Following the install everything seemed to be running fine until yesterday when I started getting the beach ball doing some very basic tasks (opening email, Safari, etc). Not thinking much of it I restarted and was greeted with this after the restart:
Did some searching on this topic and wasn't able to find any difinitive answers on what this means and while I came across some posts that said this issue was resolved by a fresh install, I still suspect my HD is failing and the root of the problems. So I concluded the following:
     1. If it's motherboard related I won't be able to start up using a secondary start up disk
     2. If it's the HD I won't be able to access the files on it when I start up using a secondary disk
     3. If its OS related, a fresh install will resolve the issue
So the computer started right up using a secondary start up disk, I was able to access the files on the HD when I started up using the secondary disk, and a reinstall of Lion netted a big fat circle-slash once again.
At this point I think it's the HD.
Anyone have any thoughts or ideas on what might be going on?

Contact Apple Service, iMac Service or Apple's Express Lane. Do note that if you have AppleCare's protection plan and you're within 50 miles (80 KM) of an Apple repair station, you're eligible for onsite repair since yours is a desktop machine.

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