OP here...were you wondering how this ended up?? Well, upon your recommendations, we checked around locally and made a few calls. The least expensive diagnostics was $40 so we decided to see what
Best Buy could tell us for free. We bought it there and they offered.
It's the hard drive. So, it is covered under warranty!

We are still waiting for the discs to arrive from Gateway (for the operating system?) and then we'll get a new hard drive installed for free.
They do offer to extract our info for $100. We're still up in the air about this. We have all our photos safely backed up to an external, but have more than $100 in digital scrapbooking supplies that I could use, including $80 in gift certificates. So... we'll see what they say on the accuracy of their process. Obviously it would be so nice to have everything back, but I'm not holding my breath.
Anyway, THANK YOU for all your suggestions and ideas!


We really feel like we tried it all with your help and in the end, thankfully, it didn't cost us to fix it.
DISers rock.
