Has my HD failed?

I was editing photos in Lightroom when my Macbook started to lag a bit. This was an infrequent occurence so I didn;t panic. After it froze for 5 minutes, I forced it off by holding the power button. When I restarted it the usual Apple logo and spinning cog appeared. After a while, the Apple logo changed to an error symbol (a circle with a slash through it). After trying to restard multiple times, I ended up getting another error symbol - a flashing folder with a question mark. Now I've looked online and this is apparently a problem with the system files.

After looking online, I followed instructions to reinstall a new verson of OSX. Since I have everything backed up, I'm okay with installing a fresh copy. I installed my disc (SL, I have ML) and followed on screen instructions. Once I was at the page where it asks where I'd like to install SL, there was no disc to click. I also had a look at the Disk Utility. Again, there was no Macintosh HD to be seen.

I really hope someone can help me with this. Any more info I'll be happy to give.

Thanks guys.