Fortunately, more likely than not, this does not indicate a physical hard drive failure (though sometimes it does). Unfortunately, this means the data (projects) on the hard drive have been lost. Try doing a reinit of the file system:

Hold down Utility & CreateCD while powering the unit on. It should display “Formatting the Hard Drive” on the screen. This will completely erase the hard drive.

If this does not resolve the problem, the Masterlink will need service.