Sam you should have claimed that on your waranty as soon as you heard something! Now its a bit late. Go to ebay, and buy yourself a hard drive to replace that one, same size, for as little as 30 bucks. They have got to be really cheap now. Or better yet, upgrade to a larger one and start using your imac more! Let us know howit goes.
"Fix it 'til it Breaks."

Jacob - EiC & Director of Technology
Mac Pro Quad 2.66 - 4GB RAM
160 GB SATA RAID 1 - 650 GB Storage
Quad 19" Widescreen LCDs
Accessorized to the Hilt