Strange, maybe the power the cd is drawing over the ide connection kicks in the harddrive too. If you set your boot order in bios to cd first, that could have the same effect, as a work around, but just guessing here. If you completely remove the cd drive, does it make a difference?
I removed the cd drive, changed boot order.... ect... and it still gives me that message.
Today I tried to format and reinstall windows, so i inserted the windows cd, the setup started just fine, it detected the harddrive. It formatted, itcopied the install files to the harddrive, then it restarted.
Then when it restarted, the cd started up boot into the begining of the setup...... so i took out the cd, and restarted, and it gave me the same media error.
So I tried again, and formated, but only created a 20 GB partition..... and it did the exact same thing
I also completly took the thing apart, blew the dust out, and didnt see anything that looked visually wrong on the motherboard
The only thing that comes to my mind is a bad bios battery, not able to hold the settings, that should be executed on posting. Could be that booting off a cd gives the time to get battery- or ac-power to the circuitry and taking over from the bios battery from there. Can you measure the voltage of it, or replace it with another one? If possible try another harddisk to see if it is found consequently on a number of postings. Don't really know how else to see if the problem is board or harddisk related.