Your internal hard drive has definitely failed - try booting the computer from DVD after disconnecting the hard drive cable from the logic board.

Do you have the original restore discs for this computer? It requires 10.6.3 minimum, and a Snow Leopard retail DVD would not necessarily boot the computer. There are two revisions of the Snow Leopard DVD - 10.6.0 and 10.6.3. If you have access to another Mac, try creating a Lion or Mountain Lion DVD to test with.

Sleep mode would not cause a hard drive failure, as the drive heads are parked just as if the computer was powered off. A drop or strike, however, could be the culprit.

If you have AppleCare on this computer, I recommend taking it to an Apple Store or Authorized service provide and let them deal with it for you for free...