Hey wolf,
Being diagnosed with PTSD is a big hurdle to cross. But the VA will also need additional information to confirm the stressor(s). If your PTSD was combat related, certain combat awards and other evidence may be required. If your PTSD was due to personal assault, other information will be required (see VBA Form 21-0781a, section 7 on page 3).
Your decision letter explains the details why your claim was denied. Did they indicate anything else other than the hearsay part? The VA should say if the stressors have been confirmed or not.
In tough situations like this, I would also recommend Ron's advice to locate a good attorney, probably one that works on contingency. This means they get paid a portion of any backpay you may receive involving the claim. Something of something is better than nothing. Also, don't let your claim go stale and don't give up!