My computer needs fixed.. help..:)

Okay, So I have A compaq notebook laptop, Vista.. Im pretty sure.. So any way..It got a virus, so my sister tried restoring it to factory settings 3 times.. then that really screwd it up.. So she put in a restore harddrive c.d from another computer, it took every thing off the hard drive and the 2nd c.d that was suppouse to put it back on didnt work.. So now its totally f**ked up.. It turns on and says.. “SMART Failure Predicted on Hard Disk 2: ST980812asp-(s1)

Warning: Immediately back-up your data and replace your hard disk drive. A failure may be imminent.

Press F1 to Continue”

So I press F1.. and it goes too..

“Windows boot manager

Windows failed to start. A recent hardware or software change might be the cause. To fix the problem:

1. Insert your windows installation disc and restart your computer.
2. Choose your language settings, and then click “NEXT.”
3. Click “Repair your computer.”

If you do not have this disc, contact your system administrator or computer manufacturer for assistance.

File: \Windows\System32\Winload.exe

Status: 0xc0000225

Info: The selected entry could not be loaded because the application is missing or corrupt.

ENTER=Continue ESC=Exit”

So.. I tried useing the disc my sister did.. I got to the 2nd disk then it freezes or says error… so I tried the Product Recovery disk that came with the computer and it went all the way through. said it was complete so I took it out restarted the computer and it went back to the “Smart Faliure” Sh**.. Any ideals of what I can do to fix it.. and spend little to no money..