Cannot do image due to bad drive - HELP

So I have a problem here which I am just not able to budge. My friend gave me his hard drive (system built by Lenovo) and a new 1TB drive. He did this because he said he was seeing an error at the Windows 7 desktop stating that the drive is bad and that it is time to backup. I saw the error too, I also saw it during boot up, we had to press F1 to go in to the BIOS or F2 to proceed. F2 and we get to the desktop only to be greeted with another error pop up about backing up.

So I said I would help, but I am not getting anywhere. This is what I have done so far;

* Start > Computer > right mouse click the C: and schedule a repair. I reboot and it does it with no errors
* Back after reboot, I did a command prompt as admin and ran chkdsk. Again, reading the results it says all is well. I reboot
* Back again, this time I rebooted again, did F8, launch command prompt and ran both chkdsk /f C:, rebooted and did the same thing, but typed chkdsk /r

During those two nothing appears to be wrong, no errors or repairs like I have seen before in my past.

So then I boot again and I try to "clone" the drive (which is 320GB) to the 1TB using Macrium (latest version) and I get an error. I checked their forums and it bascially says that it is a hard drive issue. So I go back and do all the steps mentioned and then this time I just wanted to image the drive. Same thing, I get an error about the drive. Error 23 I believe.

Is there anything else I can do to image or clone this drive?

You could try booting to the Macrium CD and create an image of the drive from there.

Also, have you tested the drive with the manufacturers test software?

I'm not an expert but did you run sfc /scannow? That might fix some Windows errors. My hard drive is on its way out and I had errors fixed by sfc /scannow and then ran chkdsk afterwards and had some bad sectors sorted. I was then going to clone it but bottled out thinking I might clone some errors (after first cloned disk had errors, hence me running sfc scannow to fix them!). So I did a clean install on the new drive. The main thing is to get your files backed up off the disk I guess.

I tried the sfc /scannow and it found problems but could not fix them. I ran the commands chkdsk /f and /r and they too found problems but cannot fix them.

I think my only option is what "AddRAM" says, new drive and install again. Gotta break the news....

Thank you everyone for responding and helping out.

It's worth it when it's all done! And you'd have a speedier system. I had to put a slow Sata II drive in mine because Sony wouldn't let it work with anything else - and it still seems faster after the reinstall :)