Blinking Folder with question mark on start up?

I have an early 2008 imac 20in, about 6 months ago I was partitioning the hard drive and erased everything on it and it wouldn't even show up when booted. I then took it down to the Mac store and they fixed it (For Free!) and loaded Lion onto the hard-drive. It was working fine for about 5 months when one day It got very slow and to the point I had to keep turning it off and on. Then one day It just wouldn't recognize the hard drive and Is now blinking with a folder with a question mark. It is recognizing an external hard drive I have that has Loin on it. IF anyone can help me that would be greatly helpful.

 

Thanks for the article. But the problem I have is that when they put the OS onto the hard drive when I took it in there, they just used one of there hard drives and not a disk. I also don't have the disk that came with it. Is there any other way to test it?