Why won't my MacBook start up/install Mac OS X?

Today, I bought a MacBook and when I started it up, it showed me a file folder with the question mark. According to the guide that came with it, I have to re-install OS X. I put in the disk, and the utility worked. However, it will not give me a drive location to install OS X. Also, it won't let me eject the disk. So... what do I do?????
Regards;
Stargazer Alchemist

Yes I can get to the Disk First Aid
I called Apple and they said it's a bad hard drive...
is this true?
Yes, it sounds like it. Will they send you a new one? They are easy to replace.
-Bmer
Mac Owners Support Group
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