3 beeps on startup

I have an early 2011 Macbook Pro 13" unibody with I7 processor and 4GB ram (2x2). I recently bought this computer used and it reportedly had water damage. I installed a new hard drive.

There are no signs of corrosion and the unit is thoroughly dry inside. When I try to boot with no bootable media I get a grey screen with a folder and ?, which seems correct for a laptop with no OS installed. If I place a bootable disc (retail Snow Leopard) in either the internal superdrive or an external drive and boot using the "C" command then I received 3 beeps which repeat every couple seconds.

I have removed and reinstalled the ram, swapped the module positions, cleaned the contacts on both the sockets and the ram modules, used 1 and or 2 modules, changed the ram to known good ram from another computer, verified the ram is the correct type and tried the NVRAM reset. No matter what I still get the 3 beeps, but only when there is bootable media in the optical drive.

A couple other things to note is that the grey screens kinda flickers during the initial boot but remains stable once it geets to the ? folder or the beeps.

Could this be a logic board/processor issue? Any suggestions?

Thank you in advance for any suggestions, advice or assistance.