Updates for those interested:
But first...to clarify to DataMedics - When I said I will tell the client her data is unrecoverable I did exactly mean that it was unrecoverable by my capabilities. Sorry for any confusion, but I thought that was assumed given the context of the thread.
So I called up a data recovery center and explained to them the issue. They said it sounds exactly like the PCB needs to be reprogrammed. NOT a chip swap. NOT that I did anything wrong in my installation...but that some older Maxtor drives simply require being flashed and reprogrammed.
Talked to the client, told her the cost ($60) and sent the drive in. I got a report from the recovery center who stated the following:
"After evaluating your hard drive we have found nothing wrong with your original PCB. The issues with the drive not reading properly are because of degradation of the magnetism of the platters. We can absolutely recover the data for $450, brand new hard drive, shipped."
So, turns out I didn't do anything wrong after all. I just happened to be the lucky guy who was running the drive at the time of failure. Turns out the client hadn't turn the computer on in YEARS. Literally, years. So no wonder, given its age.
Told the client the results (and the price) to get the data back and she said forget it.
Turns out that sentimental data isn't TOO sentimental. At least not $450 sentimental.
For those of you who posted constructive criticism and offered useful help, thank you! I can't say the same for everyone on this thread..in fact, I'm somewhat surprised at the way in which some of the "professionals" on here interact with others, but that comes with a public internet forum I suppose.
And by the way, for those suggesting I should have made a bit-by-bit copy of the drive before working on it. Hmmm...I wonder how a person is to go about doing that since that requires doing the exact same steps that I listed in my OP, but yet end up with a different result? Bit-by-bit data copy requires removing the drive and connecting it to a different computer, no? That's exactly what I did when the drive failed. So, forgive my possible ignorance here, but I don't see how it would have changed anything.
I wasn't attempting a "data recovery" to begin with. She had Win 98 which would not allow me to install any external drive to transfer files. She also had 64mb of memory, which doesn't allow you to run ANY boot CD. All I was simply going to do was connect the drive via USB, drag and drop files to a thumb on that PC, done. No true "recovery" involved.
Thanks again.