This happened to me, too. I ended up getting a CrashPlan account and have backed up the files I can to the cloud. Fortunately, I also have the same files on my Mac, so I've backed those up, too. I'm getting ready to reformat the bad hard drive, so I'll see if my time doing so was a waste or if the drive is again useable. Might be a win-win in that I have my stuff backed up in three places, but if the drive is bad, I still have the cloud and another external drive.
^^My comment is assuming you got the error from an external HD, of course.