Bad hard drive?

So a friend was getting constant disk checks on startup.  It would stop at 39% with the message 'scan disk encountered a data error while writing to the root directory.  This error prevents scan disk from fixing this drive'.  She uses AOL a lot and she said she would randomly get knocked off.  Most of the time, her pc would freeze when attempting to shut down--even when it did shut down properly the disk checks continued.

I got the tower from her and when running scan disk in safe mode I discovered there were AOL files in the Windows directory that were corrupt (along with some other no so important files like Macromedia flash).  I was able to delete them and stop the constant disk checks.  However, when I try and reinstall AOL 9.0 I keep getting 'disk write error, unable to write to disk in drive c:, data or files may be lost'.  That seems to be the only problem (where it wants to write to that directory) as the 6 or 7 other apps I installed went fine.

I thought maybe a bad sector but (normal and thorough) scan disks through safe mode and dos come up with nothing.  I copied the entire cd to her drive and tried to install it in but that error continues.  

She's willing to buy another pc before I format.  So, does it sound like the drive contrary to what the scan disks come up with?  She said this has been happening for about 6 months (I know...) and for a period when she would defrag it couldn't finish ( a message I think popped up).  But it went away somehow.