Ok, so these are my thoughts:
When the firmware is used to perform a new installation, I believe that a lot of the data is first written to onboard chips in the first stage and then from there to the HDD / CF Card Media.
In this case, it is completing the first part of the installation, but when it comes to the actual writing to the media card it cannot write any data. So this is why when you examine the CF card in Windows you are not finding the partitions - because it cannot write to the media to create them and cannot proceed further, returning the error.
This can be down to the Master / Slave settings of the adaptor interface card, or the actual interface card itself. This is why the PC will be able to write data to it, but not when you use the interface card.
Is your Hard Drive actually knackered or were you just trying to replace it to preserve it?