Microsoft Webcam Broke Vista?

I've been asked to look at a Dell Inspiron 1525 that won't boot into Vista. Only a couple of months old. Using F8 it will load as far as the Advanced Boot Options screen, but whatever I then choose (Safe Mode, Repair Your Computer, Command Line Window), it just brings up the scrolling green progress bar and seems to make NO progress (I left it running on 'Repair Your Computer' for a couple of hours but it still wouldn't get beyond the progress bar).
I ran the Dell diagnostics and it's clearly a hard disk problem, getting error code 2000-0142. It happened when the owner was installing the driver for a Microsoft webcam, but I can't believe this alone has done so much damage.
Thought if I can just get it into Safe Mode I can roll it back with System Restore, but I can't get that far in.
I thought I'd leave it running the Repair mode overnight just in case this works, but can anyone suggest anything else to try please before it goes back to Dell for a replacement drive? I recommended Dell to the owner so feeling slightly guilty.

You could try Spinrite on it , (GRC.Com) I have used it with mixed results.

Not sure what else to suggest

Thanks for the advice but I don't have this software. As it's US$89 I think I'll have to swallow my pride and advise her to ship it back to Dell. The only consolation being that at 6 weeks old she won't have lost too much data on it...
I still can't work out how installing a Microsoft webcam with a certified Microsoft driver can have done this-surely it must have been faulty anyway and just chose this moment to fail? Apparently the install crashed Vista and when she tried to reboot it wouldn't load.

I still can't work out how installing a Microsoft webcam with a certified Microsoft driver can have done this

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It didn't.

surely it must have been faulty anyway and just chose this moment to fail?

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Looks like it.

Is the drive clicking ? Can you feel /hear it spinning up ?

It may also be a good idea to show her how to back up to CD/DVD/External HDD etc .

Can you get an installation cd?
If so you can boot up from there to further investigate the problem.

No install CD was supplied. Not even a recovery CD. There is a factory restore partition on the hard drive, but it's not possible even to boot into this at startup. I've advised her to contact Dell and request a replacement hard drive. I assume in warranty cases like this they will just send out a replacement drive preloaded with Vista for the owner to reinstall.

I very much doubt the client will be required to fit her own new drive. It will either go back or they will send an engineer.