I've been searching and searching for a solution to my problem and I've seen a lot of people have similar, but perhaps not quite the same, problem.
My original HDD failed on my MBP and I'm in the midst of trying to replace it, I wanted to make sure it was the HDD that had failed, so after backing the drive up, I formatted it and began reinstalling OSX Lion, however it keeps hanging during the install process.
Next I managed to get hold of another 320GB HDD to try that one, however once I boot up the install disc and use DiskUtility, the drive does not appear. If I connect the drive externally via USB, I'm able to see the drive and format it to Mac OS X journaled, but once I connect it internally again, DiskUtility still does not see it.
After trawling through post after post, I've tried downgrading the firmware to EFI 1.6 (still no luck), I've also tried using masking tape to thicken the SATA connector.
The main answer to come back was that the issue was the SATA Cable Connector in the Mac itself, however I'm reluctant to spend money buying a new one as I'm not convinced that is the issue due to the following...
...I then connected a smaller (160GB) HDD which is a 5400rpm drive and amazingly this drive is recognised by DiskUtility and I can install OS X Lion onto it without any issue at all.
I couldn't care less about enabling the 7200rpm drive for the faster transfer speed I just want my Mac to recognise the drive internally so that I can get the thing back up and running.
Does anyone have any idea why my Mac recognises a 5400rpm drive, but not a 7200rpm drive?