You certainly haven't lost the drive "D" for ever, though you may not be able to recover data from that half.
Something has corrupted the structure of the files on that partition.
You say you used Partition Magic originally, can you not use it again to check the dodgy partition?
I'm not sure but I think you may be able to re-establish the second partition and even wipe the data on that part for a clean start.
You mention a restoration disk but don't say whether it was a CD you burned or what it backed up?