Windows 7: Interesting hardware (drive) failure (caused random outages in Win7)

My son brought over his friend's "sick" PC last night. It is a homebuilt, water cooled AMD Phenom II x 6 based system with 4GB of DDR3 RAM, nVidia GTX 9800 video card, Corsair 550 watt power supply and a NZXT case, 2 DVD burners and 3 SATA hard drives (80GB boot, Windows 7; 500GB data, 1TB data), built on a GigaByte GA-880GA-UD3H_Rev_2.2 motherboard.

The system would boot into Windows 7, then randomly crash with a screen that was colored with lines all over it, no BSOD's. Sometimes, the PC would crash when loading Windows 7 and sometimes it would run for a few minutes and then crash.

I went into the BIOS and set it to "fail safe default" since I diidn't know if/what the builder did with overclocking, etc... and started basic troubleshooting. As I was about to hook up a know good WD Raptor hard drive from my bench to run diagnostics on the system, we saw that the SATA data connector on the Seagate 1TB hard drive had broken off and the cable was just barely connected to the hard drive. The plastic part of the SATA data connector was still in the cable and the bare data pins were showing at the rear of the hard drive.

I powered it down, removed the damaged hard drive and then powered the PC back up and all was fine, no crashes or anything. I hooked the hard drive to an external SATA hard drive caddy and played with it until I got my PC to see the drive (NOT EASY!!) and copied 900GB of data (mostly games) off the damaged Seagate hard drive. I had not seen a case when the failing hard drive caused this type of problem in Windows 7 and I wanted to share thus experience with your folks in case you're ever in a similar situation...

I'm still trying to determine how to get this PC running at it's optimum settings. The only way I can get it to boot into Windows is to set the BIOS to "fail safe mode". Whenever I try the "optimal settings" mode, it fails to boot into Windows...

This is the PC, "before" and "after" I worked on it...