It's not necessarily a hardware hard drive failure, it could be due to crashing during a read/write session (as installing a game would be).
Best bet is to try and boot from the OS X DVD and run Disk Utilities. Try and repair the drive along with the drive permissions and see if that helps. If it doesn't, hopefully they have a backup (If not, lesson learned I'd imagine) and re-installing the OS should have them back up and running (minus their data).
If the HDD is totally dead, order a new one, install it, format it with the OS X DVD and re-install the OS.