it's sounding like either something is shorting out when you insert the hard drive, the drive is defective, or the connection on the laptop is defective (could also cause shorting out). only things I can suggest at this point:
-You said the drive is IDE. Check the pins to make sure none of them have been bent or pushed in (could cause a short or it won't be found while POSTing)
-Make sure the hard drive is firmly and fully installed into the laptop (prior to boot, of course)
-If you have an external adapter for hard drives (either an enclosure, dock, or other USB device), try hooking the drive up to that device and make sure it works
If all else fails, return the drive (preferably exchange it for a new, boxed, working unit).
Definitely check the pins first. Don't know why it didn't occur to point it out earlier, sorry. I've run into an issue like this before. A client tried to upgrade their own hard drive and pushed in the drive slightly crooked, bending pins and made the laptop refuse to boot up. A torx driver, a pair of fine-tipped pliers, some steady hands, and the drive (and laptop) were fixed.
If any of the pins are bent or recessed, and you don't feel up to trying to fix them yourself (they are quite fragile), return it for a new drive or take it to a local computer repair shop for them to tackle it.
Keep me posted.
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