Bad clusters, Freezing, Disk Check, now no internet

Okay, first off, I posted on the windows site about 5 hours ago and no one has helped me yet. I'm going to post exactly what I posted there and all the steps and actions I have taken and the consequences.

Woke up this morning, turned on my computer and now for some reason, it won't load past the welcome screen. I didn't install anything yesterday, when it was working just fine. Windows didn't install any updates while it was shutting down. I tried booting in safe mode with networking, does the same thing. But it does boot in regular safe mode. When I would start it up regularly, it sometimes went past the welcome screen but stayed black. I was going to choose "startup with last known good configuration" but when I restart the computer, it won't let me get there. It just goes to the screen saying I had a system failure and if I want to boot in safe mode or regularly. Help me please!! I just bought this in August 2009. Here are my system specs:

Windows 7 Home Premium
AMD Turion X2 Dual-Core Mobile RM-74 2.2GHz
64-bit Operating System
Disk Drive: ST9500325AS ATA Device
Display Adaptor: ATI Mobility Radeon HD 3650

Update 1: I was able to restart when it was in safe mode and was able to choose "start up with last known good configuration" but the same thing happens. It gets to the welcome screen and just sits there.

Update 2: After just leaving it alone while it was restarting, it stayed on the welcome screen for about 10 minutes, then went to the black screen for another 10 min. Then this warning popped up:

DWM.exe - Application Error
The application was ubable to start correctly (0xc0000006). Click OK to close the application.

I clicked on OK then it just went back to the black screen. It has stayed this way for about 5 min now.

Update 3: Still tinkering with restarting and booting in safe mode. Now, when in safe mode, a balloon message pops up in the system tray saying "Microsoft ISATAP Adaptor - Device driver software installed successfully". What is that?!?!?

Update 4: I tried performing a check disk, was able to put in command while in safe mode. After restarting, it started counting down the seconds until it started the disk check. It froze on 1 second. It has now been sitting here for 5 or so minutes.

Update 5: I did a hard restart on my computer. After a couple of hours of the check disk scan, it found a bad cluster in file 294017. My computer started and now my network adaptor is not working. I can't get on the internet! I restarted the computer, worked just fine, but still no internet. Also, the screen keep going black then back every few minutes.

I really hope someone can help me. This computer is only 5 months old and I have tried my best to keep it running in top shape! I'm not a complete idiot on the computer, I do my research and I'm usually able to fix problems myself. This one has really stumped me, especially since my computer is not old and everything is updated and was working fine up until this morning. I need your help!!

Oh, my other thread was on the Microsoft Windows 7 Forum:

bad cluster in file 294017

Not on this website. Sorry I didn't clarify that!

I finally broke down and called the HP technicians. He had me run the hard drive self test and the test failed. So, he says I need to send in my computer and they will install a new hard drive! ARGH!!

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