Do you use a wireless mouse?
If yes to either then disconnect the device or use the touchpad for awhile and see what happens.
You should contact Western Digital gain and tell them the diagnostic failed. Hopefully they will send you another drive.
In the mean time I would start over one more time. Save your data or do an Image backup then do a Clean Install (with format) again.
Immediately install SP1 and all Windows Updates, checking Device Manger before and after each step to see when all device drivers have been installed.
Once all that is done, if things are working (no freeze) then restore your data and start installing software.