Macbook ERROR (? Folder)

[iph0n3]

So I sold my brother my old Macbook White 13.3, 2.? Proc, 120GB HDD.
But my problem now is that 4 months later when it starts up for my brother a Folder shows up on the screen with a question mark in it. I told my brother to go out and get a new HDD. He went out and got a 160GB WD Scorpio at Frys for 60$. After that the computer is still showing the same symptoms of
1) Boots Up
2) Gray Screen
3) Folder with (?) mark in it

need help please..

[dontmakemehurtu]

[iph0n3]

Yeah he has tried 10.4 and 10.5. He has tried installing on both the stock Hard Drive and the WD Scorpio

[iph0n3]

Any one?