The price range they gave you sounds about right, but it all depends on whether it is a software or hardware problem. Mine was a particularly nasty software problem so it was $400. The big prices come up if the head has dropped and damaged the hard drive disk. Then they have to open it up in a clean room and start piecing things together. Those start at $600 and go to the $1,000+ if it's seriously jacked up.

If you haven't heard any screaching or scratching noises, it could just be the weird software problem like mine, but the fact that it was dropped recently makes me a bit worried that somethings come lose and they'll have to open it up.