Are there instances where lost data cannot be recovered?

Yes. There are instances where the damage to the hard drive is so severe that data recovery is not possible. This usually occurs when the read/write heads actually "crash" and gouge the magnetic storage media to the point where the data is destroyed.

However, in a number of cases data recovery was possible at the time the damage first occurred, but became non-recoverable through the use of commercial recovery software. This software is designed to recover data from working drives. If your drive has experienced a mechanical or electrical failure, the use of recovery software can cause permanent loss of your data