Laptop will not start up after running chkdsk. Now getting errors on a 2nd chkdsk

A little background first:

My Dell Inspiron N5030 was running really slow.  I ran the Dell PC check up and it said Smart short self test failed and that hard drive failure was imminent.  I ran a chkdsk test (which took a long time) and after the test I tried starting up my computer.  At first it would just go to the Windows Starting Up screen and just sit there and do nothing.  Now when I start it up, it takes me to a recovery screen and say it can not be repaired manually and gives me options for system restore, dell data safe back up etc.  I backed up the data and I also tried to do a system restore but says there are no restoral points (which I set them).  So I use the command prompt and am running a chkdsk /r.  It went through stage 1 quickly but it is now stuck on stage 2 (about 2 hours now) and it keeps repeating:

Correcting error in index $I30 for file 6361

Sorting index $I30 in file 6361

and then it repeats for file 6364

As I said 2 hours and 11% complete.

Is my hard drive toast?  Am I going to be able to recover from this without replacing the hard drive?

Please help