Jason,
If you think the Hard Drive is failing, it would not hurt to buy a new one for a fresh install. The 80Gb Western Digital (WD800JB) is a very good drive that would give your computer good performance and is not every expensive. (About $65.00 in the U.S.)
If the computer locks up while installing on the new Hard Drive then we know the problem was probably not your old drive.
With your current Hard Drive, if you want to wipe it. I suggest you use FDisk to delete the Drive's Partitions and the make a new Partition, then use Format to format the drive.
Take Care,
Richard