Hello!
I have the same problem, except that my keyboard stopped working just when the flashing hard-drive-icon problem appeared.
Coincidence? Can a failing HDD really cause the kbd to stop working?
Oh! And my battery died (after two years and one batt-replacement), so i have been shutting my MB off frequently by closing the lid and yanking the magsafe-chord after a few moments, so an incorrect power-down could very well be the cause of the failing HDD, i know that. Would i be better off replacing the top (kbd, mouse, plastic) of the MB? I'm already on my second top, and this one has a crack and a hole in it... I know, i know, i bring my MB with me everywhere, and it has seen some rough rides.