Hard disk problems --- options?

I have a MacBook Pro 7,1 (Mid 2010). The internal hard disk is not functioning properly. System started acting strange and running slow and after some diagnostics it appears to me it was the hard disk... so I tried a reinstall. Nope --- it is not the hard disk. Have tested the drive on another MacBook Pro (works fine). I have tried different known working drives and even SSD's in the internal drive bay. All fail in the same same manner: I get an I/O error when trying to partition the drive and ready it for re-install. I do not think partitioning is the actual problem, but that is where the first time the "bad drive" symptom appears.

Note, I can reinstall and boot the system using an SD card or external USB drive (partitions without issues and installs & runs OSX just fine). I simply cannot partition any drive I place in the internal drive bay. I can place a pre-partitioned & pre-installed drive in the bay, but as I said, the system runs erratic and slow on the internal drive.

I have not tried a hard disk in the optical bay. I may try that in the future to see if I can make some use out of this MacBook Pro.

I have no idea why this is happening.. maybe a bad sata controller? Bad cable? Bad circuit somewhere? I ask because I want to know if this is a known issue or problem other users have seen.

So, has anyone seen this problem before?

Thanks,
- Henrik