Not good...but I would make the optical drive the 1st option anytime I am attempting to install the O/S.
The hard drive should be the second option...and it should be recognized in the BIOS, along with the optical drive.
The only suspect I could come up with would be the CMOS battery, although it's possible for the drive to be DOA and, therefore, not recognized in the BIOS. But...the original hard drive ought to be recognized...so that refutes the DOA line of thought.
Well...with the system powered down, remove the RAM modules and then put them back in. Probably no impact, but I try simple stuff first when confronted with this type of situation.
I would resplace the CMOS battery because it's cheap and easy and may help, but won't hurt.
My next guess...would be just that, a guess