My Cloud Home White Light Blinking and wdcloud is showing device is offline

Yes, your HDD looks fine right now and you may just have to wait it out until it finishes. You have low life time hours on your hdd but errors can still occur early on in lifetime such as this HDD here. You won’t be able to do the test mentioned unless you take out the HDD or boot up the MCH with a diagnostic USB image (not usually possible and not documented).