Ghost is a hard drive imaging application, so you can make an exact copy of a disc to multiple computers. GHOST.ERR is the file it creates when something goes wrong. It sounds as if whoever gave you the machine used Ghost to prepare it.
Have you tried starting the computer without the floppy disc? What *exactly* happens? (what do you see on the screen, what errors, etc?)
It does sound like the hard drive isn't working properly, and honestly, given the nature of Ghost and its complexities, you might be much better off talking to the person who gave you the computer than trying to solve it online since it'll be impossible for us to try to work backwards and figure out what they did.