the moving bit is most probably quite coincidental... what seems to have happened is that your HDD has died. if you have an external enclosure to test it with i'd try the drive on another computer.
When that same problem afflicted my first Mac Mini in 2005 DiskWarrior was used by my local AppleStore to create a new directory. It solved the problem.
I immediately bought DiskWarrior just in case the problem happened again (plus TechToolPro later on).