Cant download mountain lion.. "osx cannot be installed you have s.m.a.r.t. errors"

my computer has never had a problem it is the newest imac and i download things everyday with no problems ever...
for some reason when i try to dl the new mountian lion it first says os x cannot be installed on mca hd.. and somthing about s.m.a.r.t errors..
so i went to disk utilties the top drive 500.11 gb wdc wd500... is in red and says this drive has a hardware problem that cant be repaired back up as much of the data as possible and replace the disk..
then on the bottem it says s.m.a.r.t. status failing in red...
again i never had a problem with this computer and still dont have a problem with downloading anything except for this moutain lion..
also im on the latest osx 10.7.4

You should always be doing regular backups.  Disks can fail at any time; so can other components; directories can get corrupted beyond repair, users can make mistakes, etc.
You might want to review the Time Machine Tutorial, and perhaps browse Time Machine - Frequently Asked Questions.
If you don't like Time Machine, see Time Machine - Frequently Asked Question #27 for some alternatives.
Did you purchase AppleCare with your Mac?  If so, the drive will be replaced at no charge.

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