Are the Apple diagnostics fool proof re: hard drive?

I have a 14 month old iMac. Three days ago, I wiped the hard drive and reinstalled the OS (reason: I had the grey screen of death) .Since, I've had a kernel panic, twice.
I ran the Apple diagnostics (found in Utilities) and everything is just wonderful. How reliable of a diagnostic tool is this?

Also, I have added 4Gs of OWC RAM (a year ago). Again, the RAM "appears to be OK."
So same question: HOw credible are these self tests?

The Apple Hardware Test (AHT) is usually reliable for finding things like bad memory, hard drive problems, and sometimes other defective hardware. But it can't find everything which is why it's probably best to have Apple test using their diagnostics program if you're still having problems.

Go into Recovery and check out Repair Disk. Got AppleCare by any chance? Don't trust Hardware Test for hard drives prefer SMARTReporter by far.

http://support.apple.com/kb/HT4718

Oh I guess that's good news if it means the hardware is good. But it's also bad news because the computer is in fresh, pristine condition but this is happening.

harryb2448 said:

Go into Recovery and check out Repair Disk. Got AppleCare by any chance?

Click to expand...

No AppleCare. I verified the disc and I believe the "repair" option was greyed out.

Apple recalled certain hard drives in iMac machines from 2010 to 2012. I believe it was the Seagate 1 TB drives that were recalled. Which drive is in your iMac?

No such luck as it doesn't have the hard drive subject to the recall.

OH, and I am just coming out of the 3rd panic attack.

I pulled the OWC RAM incase that is the problem. I also disconnected the auxiliary audio I had (from an old Dell).

You cannot repair the drive whilst you are booted from it. Hence using Recovery. How did you re-install whatever the operating system is which you have not shared with us?

All my computer info is on the left panel. At the time I had 10.8 (Mt. Lion), the "free" version, on top of 10.7, which what it is now (Lion).

I did an Internet rebuild of the OS courtesy of Apple. I suppose I was booted on a recovery partition which allowed me to access the 'Net. Not sure what happens when the HD is totally dead and how it would be possible to do a recovery.

When in the Recovery partition that was the time to run Repair Disk. Similar to booting from an older system install disc to run Repair Disk.