I know I'm new here and everything but I thought I would pitch in. I was an IT engineer for ten years before starting up on my own...
INACCESSIBLE BOOT DEVICE can be caused by many things, least of all hardware failure. It can be a corruption of the master boot record, disk errors, corrupt operating system, a scratch on a disk platter, and only then a failure. A virus is unlikely.
To do something about it before you even have to format is to load the XP install disk and go to the rescue options. Access a DOS window and type "Chkdsk". Let the drive hammer away for a while. If that doesn't pick anything up try "chkdsk /f" which is a lower level disk check. That will take some time so go and get a coffee or something while it works. If that proves nothing move on. As you have already tried a reformat, I won't suggest it here, but it would be the next logical step.
Download a copy of Ubuntu or Mint and try to install it. It uses a completely different filing and partitioning system than Windows and will often "unstick" a hard drive. If this doesn't work then the problem is hardware.
I know it's a laptop but remove the drive and knock it gently on the side of a desk then replace it. There is a phenomenon called "stiction" where static electricity or residual voltage can cause two metals to stick together. The knocking would free it. If it still doesn't work it's easier to try a hairdryer on it than freezing it. It works on the same principle just the other way round. The heat makes the different metals within the drive expand at different rates, freeing up any "stiction." Freezing is inherent with problems, not least the condensation one. It can also cause the metals to become brittle and shatter inside the drive if you try to use it.
If it still doesn't work then replacement is needed. Before you spend your money though, remove the drive and connect it as a secondary drive to another computer. You may need an IDE adapter, but they are only a couple of $. See if the other computer can discover the drive and access the rest of the data. As a secondary drive, the MBR and the first sectors aren't needed to read it. If the problem is at the beginning of the first platter or sectors, you may still be able to access or retrieve any data left on it. It would be worth trying a full format while slave and reinserting it to make doubly sure.
After than I'm afraid it's shopping time.