Dificult to say what's happened to your old hard drive, however if you wish to set up your new drive and before it can be recognised by an Op system you must prepare it as follows.
Set the drive jumper for master. leave out the old drive from the system for the time being and fit the new drive to the primary IDE interface. The drive must now be partitioned an formatted as an active primary. Not sure if the installation disk will perform this for you? If not you will have to use a dos system disk containing the fdisk command. Once you've done this, try the install again from the CD. If all goes well and the system installs OK you can put your old drive back in. If you attach it to the same interface make sure it is set to slave. You should be able to determin its status by analysing it within your new windows system, all being well.