I dropped my laptop by accident and need to recover the hard drive.

I have vista on the computer. I bought a new laptop and tried putting the hard drive into it and got

1) it didn't work. it wouldn't start up
2) some of the stuff said it was okay then we got an error
3) so then ran one of those scans on the memory and hard disk
4) memory passed
5) it said replace hard disk
6) then when I went to install windows on it when it told me to choose where to install it to it wasn't there it's like it didn't reconigize any drive at all

I took it into a computer repair store and they told me "when in one of their computers its able to reconize the partions and read the names off of them but anytime it tries to acces either of them it freaks out and freezes. Everything is still on there but their guess is that the arm on the drive is broken and can't read anything off of it." They said the files should be recoverable through them but would cost $800 or $1300.

Any suggestions on how to get my data?
Would using Knoppix work? If so how do I do this?

Thanks