If you want to get a chip anyway, you might as well use it to help with this particular problem. Get one that can be used with an external flasher (don't ask me which ones do).
Once it's installed and setup, stick your "faulty" HDD in the console and boot a Slayers/Auto Installer Deluxe disc. Take a look around the hard drive to see exactly what is an isn't there. You might get away with just installing a new dashboard, you might need to format the drive, it might be that it really is toast and you need a new one...
In the later case, the chip will allow you to just slot in a new drive and you can then set it up with your installer disc. Easy.
Regarding the installation of softmods using a modchip, there are two ways to go about it. In brief:
1) Install the modchip into each new system you get. Use a CASH 1.1 disc to install a softmod and dashboard to the system, then just remove the modchip.
2) Install the modchip into one system and leave it there. Build an EEPROM reader and use this to grab the EEPROM data off each new console you wish to mod. Write this EEPROM data into your master system, install the hard drive from the new box in there as well, then use CASH 1.1 to install the softmod. Re-install the HDD back into the new system then restore the master console's original EEPROM data.
Messing with the EEPROM is a little "iffy". So long as you make backups you can always fix your mistakes, but you'll need to do some editting with LiveInfo to get 1.6 EEPROMs to work with other console versions and vice versa (technically 1.0-1.5 EEPROMs aren't always compatible with other 1.0-1.5 consoles either, but ConfigMagic will convert those types for you).