Hi
Sounds like your hard drive is failing , I noticed you had run Diag on the drive and it passed but obviously at some stage of the Recovery install Writing to a spot on the hard drive can't be done . All i can suggest is try to download from a working PC a live CD like Hirens boot CD and try to run one of the hard drive utilities to test your drive fully.
www.hirensbootcd.org/download <<<<< download link
Checkuretch