Re: SMART Failure
SMART is actually a little onboard chip which detects whether there is likely a hardware fault occuring or not. Note that SMART is a diagnostic at hardware level and is not actually software driven.
So if this is a legit SMART warning, then I'd strongly suggest you backup, and then replace the hard drive before it stops working completely. And as its a potential fault at hardware level, that might explain why the drive is mis-reporting itself as well.
Note that a hard drive which is on its way out, may not necessarily show many signs until its too late (continually crashing or won't boot). What I suspect is that you will probably find a lot of errors picked up by the scan if this is a legit SMART warning.
If your getting the warning from Windows rather than the boot manager or BIOS, I'd probably just double check it (one of the other forum members might be able to show you how you can access SMART status through BIOS), just to rule out that this isn't some weird fake virus or windows gone a bit haywire. If you're getting this warning in the boot manager or through the BIOS, then I'd be pretty confident that your hard drive is about to die and strongly recommend you look at replacing it.