RE: bad HD...
Could have been a bad sector or sectors on the HD; preferably in the startup data sequence. I had a similar problem a couple of years ago when I used my computer, shut it down for the night, and woke up in the morning and went to boot it up but it wouldn't go past the grey apple logo screen.
Tried running Disk Utility and DiskWarrior, but neither could repair it, however, I did notice that when I was booted from a CD, I could still access my files on the computer. So, I just backed up those files to a flash drive, and wiped the HD and started over.
The installer will actually isolate and avoid bad sectors while installing and from that point on it was fine. One could always tried to rebuild the bad sectors, but I was in the market to upgrade to a larger HD anyways, so I just did that, cloned the original HD, and then just made the original a backup drive.