Short test isn't very accurate, although a failure in the short test usually guarantee's a failure in the long test.
Run the long test. If it fails, then it's time to get a new hard drive.
This is a 99+% certain test. The other <1% is due to failures of components on the motherboard. But the test for that is replacing the hard drive and then running the hard drive diagnostic again (run the bootable version before you reinstall Windows).
If you haven't made your recovery disks yet, try to make them now. It'll save you having to order a set from HP. If you don't have them/can't make them, then contact HP for a new set. I've got some info for US users here: Order Recovery Discs (USA)
It looks like you have a 320 gB 5400 rpm SATA 2½" hard drive- that'll cost you about $50 to $70 US
Purchase the HDD from a place that accepts returns - on the slim chance that this is a motherboard and not a hard drive problem.
From there it's a fairly simple matter to install the hard drive and then run the recovery disks to reinstall Windows.
If you need assistance with these steps, feel free to post back.
EDIT: BTW - if the system is less than a year old, it's probably still under warranty. Contact HP to be sure. If under warranty, the hard drive replacement should be covered. Depending on the repair center, the installation of Windows may/may not be covered (or may require that you provide the recovery disks).