How do I do this:  "This disk needs to be repaired. Start up your computer with another disk (such as your Mac OS X installation disc), and then use Disk Utility to repair this disk?"

"This disk needs to be repaired. Start up your computer with another disk (such as your Mac OS X installation disc), and then use Disk Utility to repair this disk."

Stick the disk in, reboot holding c.
Disk Utility is a menu option about the 2 or 3rd screen in the installer. (don't install OS X!)
Because your booted form the installer disk, you can repair the disk.
Quit and exit the installer and reboot.
If your drive is not repaired, make a note of all what it says, for Apple to use.
Reboot and get your files off to a external drive,
Take the note and your comptuer to Apple for a warranty/Apple care call, they will replace the drive.

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