I don't understand the problem. When you say that you can't get into the BIOS do you mean that you don't know how or that a PW is preventing it?
To enter EZSetup, press and hold the F1 key down while turning on the unit. Release after the MEMCOUNT completes and you hear the POST beep.
You'll then be able to initialize the system with the new HD installed.
Restart the system with the BOOT diskette from the recovery CD in the floppy drive and the CD in the CD drive. After the unit BOOTs from the floppy, you have to run FDISK and when it asks if you want to enable LBA support you must
answer NO! FDISK a primary partition of 2GB and set it as active, then reboot the machine again from the floppy.
Run the recovery utility on this BOOT and the CD will re-install W95 or W98, whichever your machine came with.
See also: http://www.thinkpads.com/hints.htm