Of course it's impossible to know with 100% certainty, but the problem is almost certainly with the hard drive. Whether its fairly simple data corruption or a mechanical issue, I couldn't tell you based on what you've reported so far.
You could buy a Snow Leopard retail install on DVD. Apple is selling it again, for $20 I believe:
Just repartition and reformat the drive and install from scratch. With no installation media or backups you'll then have to use the Mac App Store to upgrade to Mountain Lion; I don't think it's possible to get Lion anymore. I've found Mountain Lion to run better than Lion, even on machines only at the bottom end of the system requirements, so it would be a good upgrade for you, anyway.
You could have a friend with Lion (or Mountain Lion) create a USB thumb drive with the Lion (or Mountain Lion) installer for you. Your friend could create a DVD, too, but a USB flash drive is better. It's easy to do, and as long as you purchased Lion (or purchase Mountain Lion later) I don't think anything legal would stand in your way.
If you have data on that drive you can't afford to lose, well, I'm sure I don't have to tell you that you should have been making frequent backups. You could try connecting your computer, in FireWire Target Disk Mode, to another Mac and attempt to copy your critical data that way. But if the drive or its data is corrupt enough to not boot then your data is probably kaput.
If you have DiskWarrior, it can't hurt to try it. But if there isn't any irreplaceable data, skip it and just reformat/reinstall.
absolutely great advice! I do have both Lion and ML USB Install thumb drives, I simply thought they only work on the Mac model they were created on. The Mini came with no Install DVDs, so $20 for Snow Leopard sounds like a good investment anyway, but he could simply buy ML for the same amount. I also, for some unknown reason, didn't think that FireWire Target Disk Mode works with Intel Macs, now I know. Nevertheless, if the HD directory is corrupted I strongly doubt it will mount as a FireWire drive.
And right now I have instructed him to run fsck in Single User Mode, and it's been repairing the HD after finding the "FILE SYSTEM WAS MODIFIED". I read that it is not ideal to use it in OSX 10.4.4 or later for journaled HFS+ volumes, which I assume it is, but do you know what the potential issues are and can they be fixed with Disk Utility? In either case I have a Lion USB Install and hope that it will boot it up if the fsck is unable to fix the errors (I will mail it).
Thank you for this detailed repair manual!
no disks and I had already tried the command-D at no avail. But thanks for the tip.
The fsck function in Single User Mode was eventually able to fix the HD directory and after a night's rest the Mini booted up successfully. Now the lucky owner is directing his efforts to create multiple Time Machine backups as well as creating a bootable USB thumb drive with Lion on it. Every HD will fail, so you better have a working backup, or better multiple, and definitely have a bootable installer disk available. The Recovery HD and Command-R does not work with a damaged HD, so your only option is to boot off an external HD, USB thumb drive or DVD.
Awesome, congrats on getting that machine off life support.
I'd recommend that your friend make a bootable backup of his data using a file-level rather than block-level method, reformat his internal drive, then restore the clone back to the internal. -fsck has probably cured (or Disk Utility would have probably cured) what I imagine was directory corruption, but still; this is a more sure way of removing whatever the problem might have been.
Update: the bliss only lasted for a few minutes and the mini froze. Needless to say after booting from a Lion USB thumb drive, Disk Utility colored the stock 320 Hitachi red after failing the SMART check and noted that the hard drive was beyond repair and to contact Apple support (Both partitions checked out fine with Disk Utility which is somewhat strange). Unfortunately, I don't have the latest DiskWarrior, TechTool Pro nor Drive Genius to see if they would be able to resurrect the drive. I ran a trial version of Drive Genius 3 and it reported that both partitions passed SMART and the Hitachi drive stayed "undetermined". I haven't performed a surface scan yet, as I am not sure if eliminating bad blocks will fix the failing SMART status (the demo is limited to verify functions).
We installed Lion on an external WD USB2 and are using it as the boot drive. Fortunately, we were able to save most of the important documents, and it is a very slow process to copy files over with frequent stalls and spinning beach balls.
I assume a failed SMART check in Disk Utility means the HD is shot and beyond repair. I looked up instructions on how to replace the internal drive which seems doable, so does anyone have a recommendation for a good replacement drive (500 or 750 GB)? I have also read that using an external FireWire 800 drive as boot drive will speed things up. Any input is greatly appreciated!