You can either spend the time & money it takes to put your HD in an enclosure and risk a shorter life due to heat build up, or upgrade and get a quieter HD at the same time. Check out the Seagate Barracudas.
My old IBM drives are noisy as well. Drives with ball bearings get louder and louder as the bearings wear down.
Many modern drives have fluid bearings nowadays and are much, much quieter.
One way to quiet down older drives is to decouple them from the metal chassis to keep the vibrations from using the entire computer case as a resonator. One really easy way is to suspend the drive from rubber bands...
Oh come on John It's only been the last two or three years where hard drives have become what I'd call 'quiet'. All drives produce rotational noise to some degree; a sound not unlike a CPU or PSU fan.
Then you get different hard drives across the Pond than I do. I'm running some systems with hard drives that are four or five years old and the only thing that can be heard is the fan, which is not all that loud at all.
After getting ANNOYED with my computer for making too much noise I found out that the harddrive was the culprit. NO...it wasn't the PSU ! ! ! ! ! I bought a new 120gb Seagate Barricuda at CompUSA and I am extremely happy.....
You could make your hard drives turn off (in the power saving control panel) if you mainly use your computer for non-hard-drive type activities like surfing the net. Your C drive will keep running since it is used to cache net pages but your second drive will stay off until it is needed (if you save a file or something). That would cut the noise in half.
There are also some foam-like panels which you can affix to the insides of your case, though be sure to only get the kind that DO NOT SMELL BAD, because honestly even the ones that claim not to smell, *do* (a little bit, for awhile). I used that on one of my older PCs and there was a slight improvement:
But ultimately the best sound improvement came when I bought a Sony Vaio RZ series (which have really solid side panels, compared to the flimsy, vibration prone RS series). That didn't even need any foam-like panels to be really quiet.
Another tip: If there's a flat wall behind your PC, put a peice of foam on that wall, too, directly behind the computer. Leave several inches for air, of course. Foam on the wall will cut the sound that is escaping from the back of the computer and reflecting off the wall. But it won't stop the sound that is escaping from the front vent(s) of the computer.
Unlike the interior of a PC, you can use any kind of foam on a wall, including any random foam packing materials you may have around.