You should solder the wire on the left to the other side of the cap, like the one on the right (check out the picture on the first post of this thread).
The static sound is probably clipping due to the sensitivity of of the laptop's sound card.
Well, best bet would be to check out the click wheel and the cable and go from there.
When it turns on after you toggle the hold switch, does it load up normally (to the menu screen)? If it does, the HD is probably fine.