It's been a few weeks and the new hard drive in the wife's laptop still seems to be working fine. Did I mention hardware really drives me nuts sometimes?
So after putting the new hard drive into the wife's laptop and having it not being recognized for some reason, I popped it into my work laptop where it worked just fine. Formatted and installed Windows, got it booting and software installed. Then I stuck the drive back into the wife's laptop where by some strange circumstance, worked and booted up perfectly. Never could figure out why the drive wasn't recognized the first time. Flaky connection? Bad connection? Who knows.
The old drive suddenly decided to work again once I had it in an external drive enclosure ($10 from Newegg.com). Why, I have no idea. It wouldn't work in the wife's laptop and wouldn't work in mine either. All I did was stick it into the external enclosure, connect it to the USB port and presto, one 60 GB D: drive on the system. So thankfully, instead of having to lose all that data all the wife's stuff was recoverable and copied onto the new drive.
Not sure what magic spells or incantations I stumbled on during the process (aside from a few curse words), but now I have a 60 GB external drive that I'll be able to wipe clean and use as a potential backup device.