I (and I am sure many others) have been using 1.2 generic-pc image on
a HD since it was released with no problems. At this point I would
either try re-installing 1.2 to the HD or as Dinesh suggested, post
the status.php page.
One method of reinstalling I would recommend is using a Live cd image
from Chris Buechler
Using his live cd image, I initially installed 1.11
Once I had a stable install, I downloaded the 1.2 image and upgraded.
Hope this helps