Is a Disk Utility "fatal hardware Error" Always fatal?

Help!
I'm traveling for the next four weeks and have my lap top with me to do work.
Last night I was working fine on my computer when all of a sudden Photoshop wouldn't open files right. I quite out of Photoshop (slow)
Then tried to quit out of everything else (slow) and finally shut down holding the Power button down. I waited a few minutes and tried to reboot.
It was REALLY slow starting back up. (about 15 to 20 minutes). I held the Power key down to turn it off and left it overnight hoping it would figure itself out by morning.
This am the same start up problem happened. I finally got it opened and manuvered to Disk Utility.
IT GAVE ME THIS MESSAGE
This drive has reported a Fatal Hardware Error to Disk utility.
If the drive has not failed completely, Back up as much as you can and
then replace it with a working drive.
HERE IS WHAT I DID EARLIER IN THE EVENING THAT I THINK MADE IT WACKY.
I hadn't installed SUITCASE X1 yet and was using the program Font Book that comes with the computer. It wasn't satifactory so I went ahead and installed Suitcase X1.
FONT BOOK kept showing a ton of open faces.
I carefully (or so I thought) went through Font Books "All fonts" window and got rid of fonts that I didn't see in the system fonts folder. (I think this is where I really may have screwed up)
FYI I am a graphic designer and use many fonts.
I store all the design fonts in a folder in USERS > SHARED> FONTS
I directed SUITCASE to "Manage system fonts"
Every thing was working fine for a few hours.
I was working in QUARK 6 easily and listening to a Podcast. No problems.
When I went to open PHOTOSHOP, it (Photoshop) started running very slow.
and all the things I mentioned above started to happen.
I have the OS10.4 install disk with me so I tried to boot from it.
(I thought maybe it had a utility on it to help fix things or maybe I could copy any important fonts that I accidently trased
(btw do you hold down OPTION C to boot from a CD or APPLE C?
I tried them all)
I couldn't get it to boot from the CD
Have I really wrecked my computer?
Do we think it's a font problem.
Can I fix it. I'm at the beach in NC and there's no techys around!!!!
I am currently typing this email on the laptop so it's not completely dead.
Just super slow and threatening to die.
What should I do??!!!
Did I mention today is my birthday?
PowerbookG4   Mac OS X (10.4.6)  

It's either OPTION or C. Unfortunately, the Install CD doesn't give you much access to file operations (no Finder) as Mac OS 9 and earlier did.
If you could start it in Target Disk Mode and mount the drive on another Mac, or boot it from an external drive with a Mac OS X installation on it you could try to recover files that aren't already backed up.

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