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It could also be a number of other things. It could be a rare combination of a lot of things. Perhaps the 'bad' drive has a newer file system that isn't recognized by the desktop? (XP -> Win98/ME, Vista -> XP, Linux -> Windows, etc). It could also be the laptop is locking the drive, preventing it from working in anything but the original laptop. The fact you see XP start to boot indicates the drive at least works somewhat. It might still be bad, but it should work at least as good as that in another computer.
I'm not sure why the Linux boot disk couldn't see the drive. Silly question, but did you mount the drive? Have you tried a bootable Windows CD?
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