WD Caviar Green WD20EARX worked for all of 36 hours, need advice on what to do next?

Long story, I’ve bought a 2TB hard drive in May of 2011,  but have left it in the packaging till yesterday. One of my previous hard drives suddently croacked, so I decided it was time to finally break in the 2TB baby. Cue about 6 hours of formatting, and find myself giddy with the prospect of suddenly having massive amounts of storage space. I had been down to scrimping on the meastly 80gb on my boot drive.

So natrually over the course of the next couple of hours I decided to start moving stuff from my congested hard drive into the new one (about 25 gb worth of stuff), after doing that I went out for about a couple of hours all the while leaving my PC on. When I comeback I discover that for some reason the PC must have shutdowned and resetted itself. I then discover to my horror that I can no longer find my hard drive listed in my Computer,  and frantically reboot my PC and discover that the new hard drive is being regconized during the BIOS start up screen. So I decide to fiddle abit with the SATA and power connectors and finally managed to see the Hard drive in the BIOS startup.

Back to windows, I can finally see my hard drive in my computer. However whenever I try to enter the drive (or even just mouse over it to display space left etc,) the My Computer vwindow eventually stops responding and freezes. I try so a couple of times and I’m greeted with a popup that says “disc is not formatted (or something to that effect)”. Thats when I panic and realize that my hard drive (and most importantly the 25 gb worth of stuff) is in jeopardy. I google around for various solutions, and I’m redirected to WD’s site to dowlnload the Data Lifeguard Diagnostics program knowing that I probably have problems with bad sectors (which killed its predecessor).

I run the extended test and see that it’ll take about 6 hours, so I leave it to run thinking that all will be well. 1 hours later I get an error. Too many bad sectors. And I’m now trully stumped. Would someone who knows what this is all about give my advice on what to do next? My previous hard disc death has already taken a huge chunk of content with it, I’m pretty mad that I moved 25gb worth of stuff into a brand new Hard drive that lasted for slightly more then a day.

Also error from the the diagnostic below.

Test Option: EXTENDED TEST
Model Number: WDC WD20EARX-00PASB0
Unit Serial Number: WD-  
Firmware Number: 51.0AB51
Capacity: 2000.40 GB
SMART Status: PASS
Test Result: FAIL
Test Error Code: 08-Too many bad sectors detected.
Test Time: 14:59:10, July 10, 2012
Test Option: QUICK TEST
Model Number: WDC WD20EARX-00PASB0
Unit Serial Number: WD- 
Firmware Number: 51.0AB51
Capacity: 2000.40 GB
SMART Status: PASS
Test Result: FAIL
Test Error Code: 06-Quick Test on drive 2 did not complete! Status code = 07 (Failed read test element), Failure Checkpoint = 97 (Unknown Test) SMART self-test did not complete on drive 2!
Test Time: 15:00:27, July 10, 2012

Noticed this reply to another person with a problem with his caviar green drive.

“Have you by chance just recently repartitioned and reformatted the drive?   If so, it’s an advanced format drive.  If you’re using it on XP, you may have to download the AF alignment tool.”

I’m running XP, so could this have been an issue?

Also SMART info has every single parameter at green, so I’m pretty sure its not a physical issue.

You need to replace this drive