I'm planning on building a new desktop in the near future, and given the price hike on HDDs, I'm wondering whether it's possible to install a used HDD as the boot drive. I've got a friend with a couple spares lying around - they'd need to be formatted before I could use them. Is it possible to turn on the new system and format the drive before using it?
Yes, that's the way it's normally done. If using Windows, configure your optical drive to precede your HDD in the BIOS boot order, and then boot from your Windows installation CD. Initialise and format your drive, and then install your OS.
There are plenty of how-tos on the Internet.
BTW, if your used HDD is an IDE/PATA drive, then make sure your motherboard has an IDE port. Otherwise you'll need to buy an add-on card, or a SATA-PATA converter.