Return code 7 hard drive failure

I recently just acquired a dell 4300 pc, from a friend of mine whose hard drive wouldn't boot correctly.  Here is what I've done so far...Booted computer from Slax cd to see if it will come up as a  storage drive so i can map out a network drive to move the files.  The Slax live cd didn't see the hard drive.  The next option i chose was to put the ide drive in another computer and make it  a slave drive to see if i could see the data on it.  I had no luck.  If I click on the drive on my computer from the spare computer that i'm using the bad drive as the slave, it says the drive needs to be reformatted.  What should my next option be before I tell my friend to send it away to recover the data.  I usually can see the data on the hard drive, by doing either of these two options.  I  see that return value 7 is very common on hard drive failures but why is it asking me to reformat drive?  Shouldn't I essentially be able to see that data on the drive regardless of what files may have been tampered with, by user, spyware, or virus?  Is there any open source utilities i can use that i can install on  the spare computer that will be able to fix the drive so i can read what's on it? Or even a cheap program that is under $75.  He was talking about bringing the computer to bestbuy and have the geeksquad look at the problem.  How would they go about this issue differently then me?  The other option i had was to purchase the hard drive adapters that will read the hard drive.  but isn't that essentially the same as making it slave drive?  I also heard that you could make and image of the drive using a ghosting program.  any help is appreciated  thanks