Resolved Need help rather urgently for Win7 startup issue

Got a real catch22 here. First problem was this:
Friday PC is working great (as it has been for several months since new install of Win7), Saturday morning turned on and just get a black screen with functional mouse pointer. Sometimes it offered to try repairing windows or troubleshooting startup issues, etc. but nothing works. It loads the preliminary Win7 graphics and then just sits at a black screen. So I put the Win7 DVD in and tried the memory diagnostic which came back normal, tried troublshooting startup issues and it says that there are none. It sees a valid working version of Win7 on the hard drive. If I go to a DOS prompt I can probe the system drive and all seems well. Replaced the video card and removed the second physical hard drive as troubleshooting ideas, nothing works.

After many hours of trying to get it going, I gave up and decided to just install a fresh copy of Win7 on a different hard drive that has WinXP currently installed:

The install process completes normally and I go to enter the product code which it won't accept. I research and find that this happens if Win7 upgrade can't find a valid copy of WinXP before install (which was there, don't know why it fails). But I can't install my original WinXP because it is so old it won't recognize the new SATA drive.

This is a business computer that we really need back in service ASAP. Any thoughts on the best way to proceed?

 

Thanks!

Would have been nice if MS gave a useful message rather than just making the product key entry fail...