Dispose or Recycle Hard Drive

"There is a similar question on Server Fault: How do I destroy a hard disk? - I wrote one of the answers: :-)

If you are looking for standard procedures and reliable methods, you could read the Guidelines for Media Sanitization (PDF) of the National Institute of Standards and Technology.

For any given medium, there are three basic methods:

Clear
Purge
Physical Destruction

For hard drives they recommend:

Clear:

Overwrite media by using agency-approved and validated overwriting technologies/methods/tools.

Physical Destruction:

Disintegrate
Shred
Pulverize
Incinerate: incinerate hard disk drives by burning the hard disk drives in a licensed incinerator.

Purge:

Purge using Secure Erase. The Secure
Erase software can be downloaded from
the University of California, San
Diego (UCSD) CMRR site. Purge hard
disk drives by either purging the
hard disk drive in an
NSA/CSS-approved automatic degausser
or by disassembling the hard disk
drive and purging the enclosed
platters with an NSA/CSS-approved
degaussing wand.
Purge media by
using agency-approved and validated
purge technologies/tools.

Degaussing any current generation hard disk will render the drive permanently unusable."

"The answer would be no. Modern disk drives have some smarts in the controllers, and will monitor for failing sectors on their own. Once they find one, they generally make sure nothing gets to that sector again, and it's possible that that sector contains something sensitive, and can still be read by some means.

If you're willing to take the chance that a sophisticated user with a lot of resources might be able to read some sectors that possibly had information you might have cared about, then find some software that overwrites all the accessible sectors."