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Is this confirmation of a hard disk failure or could there be something else going on?
While there could be other problem(s), the failure of that diagnostic does indicate that the HDD is failing at a minimum. Start by replacing the HDD and then re-test to see if there are any other problems. Most likely it is only the HDD that has failed. After replacing the HDD you might also check for and install an updated BIOS (if available).
I'd reload good old (tried and true) XP on it if it were mine, but if you want a free open-source OS you might try the
Ubuntu distribution of Linux. Let me know how things turn out... Scott.
PS: Welcome to the forum!