Folder with Question Mark, Clicking hard drive and unformatted status on the hard drive in DU

Hi.
We have a mac Mini 2012. Only 6 months old and has been used as a media server for the entire 6 months.
All of a sudden the mac will not work as usual.
When it starts up there is a clicking sound, almost like a clock, then a white screen with a flashing Folder and Question mark.
I have used every startup key combination possible. I've even tried to boot in target mode with my Macbook Pro to see if I can access the files on the drive but had no luck.
I can only boot from the internet download OSX. I tried to install Mountain Lion again but there was no destination to install it to. When I go into disk utilities the drive is shown as a TOSHIBA (Blah Blah blah). Macintosh HD is not shown.
The drive has no verify or repair options and is classed as unformatted.
I decided to try and erase it and reformat it but it gave me this error "unable to write to the last block of the device"
I'm pretty sure I know the answer to this but I'm gonna ask anyway.
"Are the files recoverable?"
and what the F do I do?

No, no backups, this was the backup for my laptop which was failing as well. I moved all my media and files across to the mini, deleted them on my laptop and had the mini work as a media server as well as a back up location for the files that were still on my laptop (mainly photography work)
I guess I'll have to take it back in store for the hard drive to be replaced as it's still under waranty.
Does apple give you the failed hard drive back? we have lots of bank statements/bills/passwords and all manner of personal data stored on it. I don't want it falling into the wrong hands.

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