Try running other hard drive tests. I suggest the Seagate Seatools and the Hitachi DFT. Instructions are at this post:
Hard Drive Diagnostic Procedure
Hard drives are funny creatures and depending on how they are failing they can produce different problems.
I have no idea of how Linux works, so I'll just guess that it uses different functions when accessing the hard drive.
The main point of a dying hard drive isn't why it works using different techniques/OS's - but rather one of "When is it going to completely die?" So backing up your stuff is the most important thing to do (which you are doing).
Disconnecting/reconnecting may help if the connection between the hard drive and the motherboard is bad/dirty. And this sort of problem will give many of the same symptoms that a dying hard drive will give.
FWIW - The other day we took a Dell Inspiron N5010 apart at work. It's not an easy task, but there are plenty of directions available on the web.
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Could the windows boot files somehow be corrupted causing it not to boot, ...
If that were the case, then you'd be able to boot to the System Repair disc. System Repair is a tool that checks and repairs (if needed) the Windows boot files.
In the US a hard drive will cost you between $50 to $90 (shop around for a good price on a brand name drive on the web) - and it'll take you a couple of hours to take the system apart in order to get at the hard drive, and maybe a little less to put it back together (depending on your mechanical aptitude).
My shop charges approximately $200 (+ the new hard drive) in order to diagnose the problem, install the new hard drive, and then install/update Windows (using your Dell recovery disks). Quite frankly, because of the difficulty in disassembling the system - this is a great deal!
A new computer is $400 to $600 for an entry level model.
It's your choice, go with what best suits you.
Good Luck!