Right, the hard drive is the main storage on your computer. It stores your operating system, your applications programs (word processor, web browser, video editor etc.) and your data.
It's basically one or more platters coated with a magnetic substrate. There is a read/write "head" for each side of the platters (2 platters = 4 heads). The platters spin around at high RPMs (7200 rpm is one standard) and the heads step across the surface of the platters reading or changing the magnetic polarity of the substrate. The heads don't actually touch the platters - there is a minute gap in microns between the head and platter.
Hard drive failures (crashes) occur from:
Something in the controlling circuit board on the drive or the motherboard of the computer fails - sometimes no data is lost when replacing the board, however replacing the circuit board on the drive itself requires highly trained technicians to do it right
The motor or spindle bearings on the platter fail - if the drive was writing at the time catastrophic data loss can happen.
head crashes (ususally the most catastrophic):
The "voice coil" or stepping motor that moves the head fails
The pivots or head support arms break so the heads actually strikes the platters
Aligment of the heads go out - in severe cases again the head strike the platters - normally cause by physical shock - dropping, slamming, pounding or kicking the computer.
The heads striking the platter can actually scrap off some of the magnetic subtrate and data cannot be recovered.
Recover options:
Given the grinding sounds it doesn't sound very good to me. However check the CD/DVD drive and make sure there are no discs in there - some one may have jammed two discs in there or one disc is improperly seated causing the grinding noise. This should not give you the MBR error though unless it may be trying to boot off the CD/DVD.
As suggested by others you may be able to start you computer from a CD/DVD and copy your files to a floppy disc or flash drive. Gateway should probably have given you a recovery CD/DVD however this should be used with great caution as it could wipe you drive out and restore it to the condition when you first purchased it..
If you are able to start your computer from a CD/DVD but still not be able to read your hard drive a program like
Spinrite may be able to get it back into a readable condition so that you can copy off at least some of your data.
The next step up from that would be use a professional data recovery service such as Ontrack (google search "data recovery"). These companies will recover as much of the data from the drive as they can onto whatever format you want - you can send them a blank hard drive, various tape backup formats, or CD/DVD. If the drive can be repaired or is under warranty they often will send you back a working drive (repaired or replaced) as well as the recovered data. They are not cheap, but then what is your data worth to you?
Normal repair shops (and even Gateway) will not recover your data for you. They will most likely replace the drive and restore it to the "out of the box" condition.