At start up I get a note that says something about bad sectors on hard drive, failure emenet, replce hard drive. How hard is this what will I lose and what should I look for?

Backup your needed data ASAP. Burn it to CD, write it to a flash drive, whatever. Make sure you get what you need.

After you have done that, run Scandisk. Do a thorough scan and repair errors. The media on your platers may be degrading. This may provide a stopgap measure.

Then, replace the drive. They are cheap enough.

You could use Ghost and completely image everything on that drive to another one. You just hook up the second drive and boot to the ghost floppy. I could "loan" Ghost to you if you'd like. That way you just hook up the second drive in place of the original, and then its like nothing ever happened. All your data and programs are still there. It will even copy over your cookies and spyware if you have any.

Is that a compac? When I was at XO (Nextlink) that error ment you had about 3 boots left before the drive was toast. Sorry.
Most times, we could still access the drive as a slave, but they arent kidding around with that message.