Ahh! Macbook won't start!

I have a 13 inch 2008 Macbook that will not start. I know very little about the technicalities of computer repair and such. I have both Leopard and Windows XP on the machine, and I also use Parallels. I had Parallels running and was transferring some files from the Mac HD to the Windows one to free up space. That's when it froze/ I did a hard reset, but when it booted back up the Apple logo did not appear. Instead, a prohibitory sign appeared. I tried resetting again and a folder with a question mark appeared. I searched for help topics and found some articles on the apple site. I went to Disk Utility and Mac HD was not mounted and could not be repaired. It said I should reset the PRAM, which I did. It then instructed me to boot from CD, so I chose that as the CD as the startup disk. Now, the Mac HD and Windows HD are gone in the disk utility menu, and are also not there when I hold down Option after turning on the computer. The Mac will not allow me to select a destination volume when I try to re-install the OSX. Ahhh! Can anyone help? Is there anyway to fix this and keep my files? Is there anyone way to fix it, period?

Thanks!