How important is the data on the drive? I know you said you "need" them, but what I'm asking is do you need them bad enough that you'd pay (possibly big) money to get them back?
The reason I ask is that if the drive is indeed failing - and from your description it sounds like it is - your best chance is professional data recovery. If you are willing to pay for that your best option is to shut down the computer and disconnect the drive right now. The less you mess with it the better your chances of getting anything back.
If you're like most people, paying hundreds of dollars to get your stuff back may not be an option. In that case, you can let teracopy keep on trying and see what happens. (Or try the program WindowsStar mentioned. I'm not familiar with it but it's worth a shot.) Teracopy will eventually give up if nothing is happening, but just might start finding stuff it can save for you. If you are talking many gigabytes of data it might take a while.
An old trick is to leave the hard drive in your freezer overnight. Seal it tightly in a ziplock bag first. I know this sounds weird, but freezing the metal components of the drive sometimes releases whatever is binding and making the grinding noise.
As I said before, if you have the money and really - REALLY - need this stuff, turn it over to a professional data recovery company before you mess with it. The longer a dying drive runs the closer it gets to final total failure.