Many manufacturers of hdd's will supply a utiliity programme which will allow you to copy from the old drive to the new one, includings the o/s. Maxtor supply maxblast3 for instance. Check the web site of the hdd manufacturer to see if one is available.
You could also use a free programme such as xxcopy. A Google search will find a download site.
As you new drive is showing system failure, I assume you have partitioned and formatted the drive. Is it recognised in POST?