I have a WD Passport 2TB USB drive with a file on it I could not read, so I downloaded the WD Dashboard and ran the S.M.A.R.T. Diagnostic Extended Test and it found nothing wrong with the drive.
I ran Windows 10 chkdsk /r and it found a bad cluster in the file and replaced it. It found 21 other bad clusters in unused space and marked them.
It seems the WD test is unreliable.
If there are bad sectors showing, get the WD Lifeguard tool and ease the drive to activate sector sparing.
the do a long format on it before returning it to service
" Data Lifeguard Diagnostic for Windows has been DEPRECATED and replaced with the Western Digital Dashboard utility. Data Lifeguard Diagnostic for Windows is no longer supported. Please use the Western Digital Dashboard utility available at Software and Firmware Downloads | WD Support "
Lifeguard is more suitable for hard disks which is what the OP has
WD Software is more focused on the new SSD products
WD Drive Utilities are indeed unreliable, I would say useless, even for HDD.
One of my NAS HDDs suddenly went to state red and had to be removed from the NAS (all are WD products). After I attached the drive to my PC and checked it with the WD Drive Utilities, the drive showed no flaw. By using CrystelDiskInfo I could see that indeed something was out of order. I suggest using some other tool that can really read the SMART parameters from the drive and perform some useful analysis.