The gray screen is apparently in MS-DOS possibly from a floppy boot application, so it appears you may have a floppy disk still in the drive. If that isn't the case, boot pressing the Delete key and in the BIOS Boot menu configure the Hard Drive as the first boot device. If nothing of this helps, reset the BIOS to default settings / failproof defalts.
Anything happens if you select <NextHD> or [HD1] 09 and press Enter?... describe exactly what happens... does it reboot, do nothing, what?
There is no floppy drive present on the pc. I went into BIOS and turned the "diskette drive" to off. The original problem was the "diskette drive seek failure" press f1 and f2 and after turning the diskette off it went into the infinite boot routine no matter what I tried. In the picture where it says [hd1] 09 it just counts down to zero then tries again and does the same thing. I can get in BIOS but thats not helping. I was able to put the drive in another pc and get the data off it, so drive seems to be ok. I think its something with the MBR. But this is my grandmas computer and she does not have the original OS disk. Its a dell from 2006 running windows XP. I told her its time to get a new one anyway, but just trying to get this one going again until then. Would try the recovery console with a windows xp disc but need one and pc only boots to this screen and will not recognize either optical drives installed. And by selecting "next" it just stays on the same screen and starts the countdown from 9 over and over. Did try resetting the bios and that did not help either.
No BIOS that I know of, does any countdown... It could or not be the MBR but that has nothing to do with the Optical drive not booting, so I don't think the Hard Drive is the problem... It seems to me more like the BIOS is causing it.. it may be it's stuck in some setting. The gray screen may be the BIOS Boot Device Selection screen, the BIOS displays this screen with one of the F# keys when you want to manually select the boot device. So my guess is the BIOS is stuck in the setting by some electronic fluke. How did you reset the BIOS? by switching the jumper from pins 1-2 to 2-3? If so, try by removing the Battery for at least 5 minutes. Also try replacing the BIOS (CR2032) battery. If it's been in use for more than 4-5 years it may be to weak to hold settings. This is probably not the cause but it could be part of it.
What Dell model is it? You could use the computer model or service tag to search in the Dell website for the user manual so you may have a better idea of which BIOS setting to check or tweak to try and correct the setting that may be causing this.. that's if you have a possible setting accessible because Dell locks many of the settings so it's impossible to tweak at your convenience.