Yes, the drive is shot.
If you clone it, the recovery must be kept the same size and at the end of the drive. TI 9.1 will do it, use the expert options.
If it has problems booting after a clone, you can use a nondestructive recovery using the recovery partition - as long as the recovery partition on the original drive doesn't have errors.
http://h10025.www1.hp.com/ewfrf/wc/d...cname=bph07145