PLEASE HELP! Unable to reinstall OS after after boot disk faliure

Please someone help. My wifes pc, a HP pavilion P6320y, went down one night and rebooted itself, froze on blue screen, would not run post or load OS. Attempted system repair, which said was successful after repairing bad sectors. The pc restarted and froze on blue screen again. After this, we attempted full system image recovery, and got "status:0xc00000e9 Unexpected I/O device error has occurred". We then went ahead and bought a new hd for the pc and installed it. We got the same darn code. Other things we have tried: switching SATA, data, and power cords. Replacing the cmoss battery. Unplugged and re-plugged all connections. A side note: smart status check in bios will recognize hd with ok status one moment, and the next moment says the brand new hd "failure is immanent". We are running, or was running, windows 7 home premium 64 bit. Another side note: with the new hd, we almost got it to run a full system restore, however it stopped in the middle of the process and gave us the error code 0200. Now it is just giving us the old code. Some one please help! My wife is taking on-line classes and we have to have this running again and we cannot afford to just go buy her a new pc. Thanks all.

I may have posted this in the wrong spot. I am sry if I have.

If there are bad sectors in the hard drive you cannot install Windows. You will need to replace the hard drive. There is bootable disc called as UBCD. Boot this in your system. Run a diagonistic test for ram and hard drive with this drive. Also try to install windows is different partition if you have. Remember that this will wipe out your data. Read the below threads for more info.
Status: 0xc00000e9 - An unexpected i/o error has occurred booting from WHS Client Restore CD-ROM
0xc00000e9 unexpected I/O error has occurred