iMac Startup I/O Error Despite Successful Disk Repair My Early 2008 iMac with OSX 10.8.5 no longer boots beyond grey screen with spinning gear. Verbose mode shows a load of I/O errors. Disk Verify/Repair run via recovery partition completes successfully, as does fsck terminal command in single user startup mode (it modified the files on first run but not second). I reset the NVRAM too.

However none of these have helped, same I/O errors afterwards. Thinking it might be due to OS files being corrupted I created a USB drive with installable version of OSX (actually 10.9 Mavericks), but it crashes during install.

I wanted to try Apple Hardware Tools diagnostics but the startup shortcuts D or opt+D don't work - I read it's been removed so presumably I'll need to find a way to reinstall it first. I've tried the usual fixes such as safe mode (won't boot), removing all peripherals, even the RAM sticks.  I can't hear the drive making any grinding sounds.

Is there anything else I can try to fix this? Is it likely the HD has died even though Disk Repair is returning success?
Disk I/O errors literally translate to input / output errors, which occur when the system is unable to communicate properly with the hard drive.  This is very indicative of a hardware failure, whether it be with the hard drive itself, the logic board or the SATA data cable that runs between the two.  Given the age of your Mac (5~ years) I would assume that the hard drive is to blame.  Disk Utility repairs the volume on the disk at a software level,  often it will report when hard drives have a hardware failure but there are also times when it repairs correctly despite communication errors still being present.  

Apple Hardware Test (AHT) IS pretty good at giving you a solid answer but as you've found out it's no longer on your hard drive, likely lost during an old upgrade or re-install.  You should be able to boot to it using the gray restore discs that came with your iMac.  Discs from another iMac/Mac will not work unless it's identical to yours, these are very hardware specific.  AHT should be on the disc labeled "Applications Install DVD", with a small mention of AHT and its version number.  Holding down D while booting with that disc inserted should boot the Mac to AHT.