Dead hard drive dilemma

Question

Earlier today I dropped my macbook by accident. Afterwards it was working just fine up until a few hours later when it randomly decided to freeze. I turned my Macbook off and on again and now it stays on the grey Apple boot-up screen with the spinny thing going for ages and just won't boot up. I've tried using the safe mode method, the cmd+alt+p+r method, two cmd+s methods and such but it won't boot up.
I know it's a hard drive issue because I am able to boot of my external drive. A couple of months ago I replaced my 160GB hard drive with a 500GB one (one being internal and one external, i basically switched the two hard drives into eachothers cases) and there hasn't been a single problem with it until I dropped it today.
I would/should have backed up the hard drive, but there was too much data on my 500GB HDD to fit on my 160GB one. I also can't afford a Time Capsule. I've opened the macbook and the HDD looks fine, no loose connections or dints or anything. I'm also wondering if there's a way I can recover the data from it as the HDD that is playing up is visible when I boot from my external, however, the files are not the same as they were when it was usable, they're really old ones.
If it helps I have a MacBook (13-inch, Aluminum, Late 2008) 13.3"/D2.0G/2x1GB/160/SD-DL

Answer 1

Try this:
Reinstall Snow Leopard without erasing the drive
Do the following:
1. Repair the Hard Drive and Permissions
Boot from your Snow Leopard Installer disc. After the installer loads select your language and click on the Continue button. When the menu bar appears select Disk Utility from the Utilities menu. After DU loads select your hard drive entry (mfgr.'s ID and drive size) from the the left side list.  In the DU status area you will see an entry for the S.M.A.R.T. status of the hard drive.  If it does not say "Verified" then the hard drive is failing or failed. (SMART status is not reported on external Firewire or USB drives.) If the drive is "Verified" then select your OS X volume from the list on the left (sub-entry below the drive entry,) click on the First Aid tab, then click on the Repair Disk button. If DU reports any errors that have been fixed, then re-run Repair Disk until no errors are reported. If no errors are reported click on the Repair Permissions button. Wait until the operation completes, then quit DU and return to the installer.
If DU reports errors it cannot fix, then you will need Disk Warrior and/or Tech Tool Pro to repair the drive. If you don't have either of them or if neither of them can fix the drive, then you will need to reformat the drive and reinstall OS X.
2. Reinstall Snow Leopard
If the drive is OK then quit DU and return to the installer.  Proceed with reinstalling OS X.  Note that the Snow Leopard installer will not erase your drive or disturb your files.  After installing a fresh copy of OS X the installer will move your Home folder, third-party applications, support items, and network preferences into the newly installed system.
Download and install the Combo Updater for the version you prefer from support.apple.com/downloads/.
OR:
Reinstalling Lion Without Erasing the Drive
Boot to the Recovery HD: Restart the computer and after the chime press and hold down the COMMAND and R keys until the menu screen appears. Alternatively, restart the computer and after the chime press and hold down the OPTION key until the boot manager screen appears. Select the Recovery HD and click on the downward pointing arrow button.
Repair the Hard Drive and Permissions: Upon startup select Disk Utility from the main menu. Repair the Hard Drive and Permissions as follows.
When the recovery menu appears select Disk Utility. After DU loads select your hard drive entry (mfgr.'s ID and drive size) from the the left side list.  In the DU status area you will see an entry for the S.M.A.R.T. status of the hard drive.  If it does not say "Verified" then the hard drive is failing or failed. (SMART status is not reported on external Firewire or USB drives.) If the drive is "Verified" then select your OS X volume from the list on the left (sub-entry below the drive entry,) click on the First Aid tab, then click on the Repair Disk button. If DU reports any errors that have been fixed, then re-run Repair Disk until no errors are reported. If no errors are reported click on the Repair Permissions button. Wait until the operation completes, then quit DU and return to the main menu.
Reinstall Lion: Select Reinstall Lion and click on the Continue button.
Note: You can also re-download the Lion installer by opening the App Store application. Hold down the OPTION key and click on the Purchases icon in the toolbar. You should now see an active Install button to the right of your Lion purchase entry. There are situations in which this will not work. For example, if you are already booted into the Lion you originally purchased with your Apple ID or if an instance of the Lion installer is located anywhere on your computer.