S.M.A.R.T. status bad, startup repair loop, can't reach boot menu.

NOTE: I don't know if this is the right section to post this in, I'm new on this forum.
This PC has been a pain in the ass for a few months already, and it's only getting worse. I think it finally hit the brick right now, but I feel that I should still ask for last minute help.
First of all, I'd like to point out that my PC freezes from time to time - stays like that for about a minute or so, and then works fine again. While it's frozen, the red lamp next to the Power button is constantly shining, and while it works fine, it flickers. I'll mention this again later on.
So, the first issue I have is that upon starting up the PC, I get this message:

Pri Master hard disk: S.M.A.R.T Status BAD, Backup and Replace
Press F1 to continue

Click to expand...

I know that I can still keep using the PC with this error, although it is recommended not to. However, I found this to make me unable to reach the boot menu, as my PC freezes with a black screen for about 40 seconds after this screen; I repeatedly tried mashing F8 (AND holding it), no good.

Which brings me to my second problem, the infamous Startup Repair Loop. After the "Black Screen of 40 Seconds", I get to choose between the startup repair or starting Windows normally. When I choose startup repair, it takes about a minute to get it over. When it's done, the Starting Windows screen looks different - there's a loading bar similar to the one from XP, but after it, the PC just restarts, and it's the whole thing all over again. When I start Windows normally, the Starting Windows screen is the default Windows 7 startup spinning colors thingy, but the PC freezes completely after that. Just black screen and that's it.

I found this tutorial to avoid this problem, but I can't get to the boot menu. Can someone help? Thanks in advance.

Pleasure to assist. It's simple. Either you need a new primary hard drive, or you can attempt to fix it with a utility like Spinpoint for arguments sake.

When you began seeing the SMART warning was the time to have done this really.

I agree.

Replacing your hard drive as soon as possible should be your first priority.

At least you have the chance to retrieve any data that is important to you.

OK, thanks for the answers, just one more thing.
I know it's a bit off-topic, but how much would HDD replacement cost? My current Hard Drive has 1TB, when I deliver it to be replaced, does it have to be of the same size or can I choose? I would like the price to be as low as possible, but still have a HDD with a solid size.

If necessary copy out your data using the Win7 DVD or System Repair Disk:
Copy & Paste - in Windows Recovery Console

Then use the HD maker's HD Diagnostic extended CD scan to see if the HD can be repaired, if successfully follow with Disk Check.

You might be able to salvage it as a secondary HD but I would replace it as primary.

Got some bad news for you, last year there was a major disaster in Thailand, flooding and this caused massive damage to the factories over there which just happen to build hardd drives, thus the price of harddrives has more than doubled and wont go down for at LEAST another 6 months, you are talking £100.00 for a 1 terr drive, this is in the u.k, it will be similar in the us.