BSOD loop

I can't tell you what to do. But, if it were mine, I would first open it up and make sure all of the cables to the HD were properly connected and in good shape, I may even try to plug the sata cable into a different port. If none of that helps, I would put another hard drive in with a new sata data cable. Even though the test says the hd is OK, everything you are telling me sounds like the hard drive. These things are difficult to diagnose by email, but that is what it seems to me. It is your decision. That HD is somewhere around $45 US. I don't know about there and with the diagnosis from Dell, it would be a gamble. Keep in touch and let me know how it works out. If you cannot access the HD, there is very little that I know to tell you.

Yes I would as well, but I can't decide for my mother since I am far away she does not trust my younger brother to do anything with the computer due to its value to her, but I will discuss her options over the phone she wants to take it to the computer store but I beg to differ due to the price they will charge will just be as good as buying a new hard drive.

No. They will charge her more. Then sell her a hard drive too. The worse that can happen is that it won't fix the problem but she will have 2 hard drives now.