Have you opened up the ZG5 and actually checked the cables to the internal drive (SSD, I presume)? I suppose once you've got the netbook open, if the cables are properly seated, and the ZG5 still doesn't boot, the next step would be to try to remove the drive from the ZG5, and hook it up to another computer to see if it's readable. The default filesystem for the AOA110 was ext3; if you're checking from a Windows computer, you might want to first install ext2fsd on the Windows computer - it will enable you to read/write an ext3-formatted drive.
Not sure why the recovery DVD would want a password. It restores the AAO to the factory default state - all data on the internal drive will be lost. If you're going to go that route, I strongly recommend replacing hopelessly out-of-date Linpus Lite with a current Linux distro. FWIW, I run Fedora 16 on my ZG5.