Folder with Question Mark Icon--hard drive kaput?

Hello,
I know there's extensive info on this occurring at startup but I wanted to ask anyone a couple of specifics. 
1). My imac is old.  It's from 2007 and while I've enjoyed it etc., I understand that it's time has "probably come".
2). No and this is my bad; I've not backed it up.  Luckily, there honestly isn't a ton of irreplaceable stuff on it so in worst case scenario it's not a disaster.  It's more of a nuisance. 
3). I used OSX Leopard. 
So here's the meat and potatoes.   Whether its coincidental or causal, I can't say but after I upgraded my iPhone to iOS7, I started to get a couple of "can't connect to iTunes" errors and then suddenly my imac shut down and when I tried to restart, I'd get the grey screen with the ? folder. 
I'm not a techie but I tried the gamut of troubleshooting fixes.   In short,
1) I tried rebooting after unplugging peripherals.
2). I tried rebooting while holding the Option key. 
3). I tried inserting the OSX install disc and restarting while holding down C.  The computer merely ejected the disc.
4). I tried resetting PRAM
On all attempts, the folder icon reappeared.  I cannot get any kind of disk utilities tools to open.  I cannot get past the folder icon. 
I went to the Genius Bar this AM.  The techie ran a diagnostic and concluded that my hard drive was dead and that he cold not help me anymore because the machine was too old.  He couldn't/wouldn't give me any details presumably because apple has no interest in servicing/dealing with an old machine. All he would say to me is try an authorized reseller. 
My experiences with Genius Bar are routinely unpleasant so I can't tell if this guy was truthful. 
My questions:
1). Is there another fix I can attempt to get the imac to reboot?  If I can get one reboot, I'll go immediately back up everything. 
2). Does this sound like a hard drive death?
3). Are my data lost forever?  
Thanks!

I tried rebooting while holding the Option key.
If the startup disk is not available from the Startup Manager window, that's an indication that the disk has failed 
Genius Bar was most likely correct.

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