Not good ;-{
Your hard drive has failed! The scratching noise is likely the head assembly rubbing on the disk.
You'll need to find a replacement drive which will be hard as the drive is an older PATA unit (IDE). Once you get the drive out you should be able to search for a replacement using the make and model info on the drive for an exact replacement. Finding one new will not be easy, more likely to find a used one.
Here's the IFIXIT guide you'll need to follow to replace it: [guide|4|PowerBook G3 Wallstreet Hard Drive Replacement]. In addition, you'll need to find a copy of the older Mac OS-9 on a CD to prep up the replacement drive if you still have the grey disk that came with your system you'll be all set otherwise you'll need to hunt down a retail version of the software on eBay.