Acer Netbook problem

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Right, these netbooks are absolute useless. It's my girlfriends, (Acer Aspire one, ZG5 "AOA11")
Basically i had just reformatted it for her and installed windows 7 after upgrading the memory to 4gb, re-installed the neccessary drivers.
Was half way through installing the LAN driver when it restarted itself for no apparant reason, anyways i was getting an error relating to the following:

"Intel UNDI, PXE-2.1 (BUILD 082)"
"PXE-E62: Media test failure, check cable"
"PXE-M0F: Exiting PXE ROM."

I knew that problem, so disabled the network boot in the BIOS, that was solved.
Soon after this i was getting the No bootable device -- Insert boot disk and press any key.
I've been having this problem for a few hours now, and it's really starting to stress me out.
I've tryed putting Windows XP onto a 2GB USB Memory stick, but yet still no luck with that. It isn't loading on the NTFS format as it shows that BOOTMGR is missing, tryed it on the FAT Format and just states yet another error,
"Remove disks or other media."
"Press any key to restart."

Unfortunatly i don't have an external cd drive to boot from CD-ROM. This is why i am trying to boot an installation from USB Memory stick.
Regards, Dean.
 
The drive could have bad sectors, but if you can't check it, you'll have to swap it out for test purposes
 
Does it still have the integrated recovery partition for Windows XP? Save all your data on another disk, because the computer will be formatted doing this. Restart the Acer, press Alt+F10 before windows starts, and it will take you to the recovery menu. From there you can choose to restore it to the original state.
 
Does it still have the integrated recovery partition for Windows XP? Save all your data on another disk, because the computer will be formatted doing this. Restart the Acer, press Alt+F10 before windows starts, and it will take you to the recovery menu. From there you can choose to restore it to the original state.

It has the PQSERVICE 5gb partition, but i'm sure that's not the partition for the recovery as the ALT+F10 doesn't seem to work at the POST Screen. Or am i pressing it too early?
 
Hmm this helps a bit, now i've just got to figure out how to hook the ACER HDD to another one of my laptops with an operating system installed =/
Would windows 95 - 98 work? and would i be able to install an operating system onto a memory stick to be booted from on the acer? bah my head is rather sore.
 
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