|"If this does not work and the drive is new, return it for a replacement. If you bought is used or on ebay, good luck getting it resolved."|
You can try 3rd party software, but IF you cannot partition the drive from Disk manager which means you are trying to partition it as a second hard drive, Cannot partition the drive from Windows install disk (don't know what changing the MBR has to do with partitioning), you just might have a problem with the drive internally.
Try this one last thing: Put in the install disk and shut down the computer, UNPLUG the original hard drive (power and signal cables) and plug in the new drive (so it is the only hard drive installed), start the system and boot to the install disk and partitioning it now. This will ensure that there is no confusion as to what you are doing, no interference from the other installation of windows, AND will ensure that the installer will install a NEW MBR on the new drive rather than replacing the boot partition on the old drive, making THIS drive bootable by itself. If THIS fails, replace the drive (or if you think you made an error, have someone else with more experience try this for you). There is not much that is possible, though you can test your memory if you suspect that your errors are possibly originating there (does not sound likely, but maybe possible).
You have to be a little bit crazy to keep you from going insane.