Who should pay, you're kidding, right?
It all depends on whether you want to continue to be friends with the owner, whether you will ever need to borrow anything from him ever again and whether he has anything that belongs to you (maybe). Put yourself in his shoes for a minute, he lends out a machine and it comes back broken. He can turn the other cheek but we're not fighting the Romans here. In the long run a few bucks is little compared to the value of friendship. That said, if you truly don't have a few bucks and he knows this to be true, then friendship will perservere. Or you could sell your computer.
Suppose neither one of you owned it. Would you break it, leave it broken, and just hand it over to him knowing he was going to use it next?
We are all put here to help each other.
He helped you when you needed it.
Giving it back broken isn't gonna help him much.
Of course you should pay, that is what you should do and it would be fair to get it fixed and then mention that it broke.
Getting it fixed is the right thing to do, period.
One of the TBN posters said it best... life is tough, first you get the lesson, then you learn.
Cheer up, far worse things could have happened.
Ante up and move on knowing you're a better person who did the proper thing.
Martin