Is there another drive on the same IDE channel? If so, be sure it is also set correctly.
It could also be a bad IDE cable. Try re-inserting the cable. If that doesn't work, try another cable. You may also want to double check the connector between the tray and the drive. I once bent one pin on a drive, and it wasn't especially visible until I actually unplugged the drive.
I had a similar problem with a mobile rack. After awhile, the contacts can get dirty and cause such problems. You can try cleaning both sets (the tray and the rack, itself) with a Q-tip and alcohol. If that causes some change, but it doesn't fix it, entirely, you may still be on the right track.
I eventually used WD-40, which works as a good cleaner and lubricant as long as it doesn't attack the particular plastic used in mold that holds your contacts. I had already figured out that was the problem so I didn't have to worry about whether the WD-40 would ruin the rack. Either it worked, or I was due for a new one.
