IMac is overheating? Or is my Hard Drive dying...

Question

So, I think my iMac is dying in some form or another, but I'm not sure if it's the hard drive, something heat related, or a combination of the two.
A preface: the machine is mainly used for the web, iTunes, and Warcraft, and I run iStat menus to keep track of system temperatures, etc. I run SMC fancontrol to keep the fans spun up when playing wow, and have noticed a significant difference in wows performance since beginning to do that late last year. Over the summer, I've noticed serious intermittent performance issues. Looking back, the common thread seems to be that I have issues when I'm not running the air conditioning, and the ambient temperature heats up over ~80 degreesish. The hottest I see my mac get when having these issues is ~135 (all temperatures are farenheit), and they seem to be substantially reduced below 125 degrees. Programs can take a while to launch, the system intermittently hangs, especially playing music or games, and beyond the stutters when playing music in iTunes or while playing wow, I find that the machine simply will not finish booting after being shut down if it's hot. I need to let it stay off for an hour or two and cool down to boot properly.
Running Apple Hardware test (on a hot machine) comes up with an HDD failure, and running disk utility fails to complete, or just doesn't even see the drive (if run from a cd while the machine is 'hot') - if I run both when the machine has cooled down, things pass with flying colors. The AHT error is: "4hdd/11/40000004: SATA(0 , 0)" - which, I'm presuming based on some googling means the drive is in fact, screwed. But it passes other times, so I'm just thoroughly confused. Will a new Hard Drive fix it? Should I be looking at something else?
This machine is out of warranty, and I'd /like/ to get it fixed for cheapish - any reccomendations? Was looking at this drive from Newegg: http://www.newegg.com/Product/Product.aspx?Item=N82E16822136218 , but I'm a few years out of the loop on messing with iMac innards, so tell me if that's a bad choice. (It's a 2.66 Ghz, Early '08 Aluminium model).
Attempts to back up the drive have been mixed - things move /very/ slowly sometimes, and occasionally flake out with an utterly uninformative error -26 after spending an hour copying (and we're talking trying to move 1Gb files over FW 800 - that shouldn't take a whole hour.)
Alternately, the issues I'm having seem to be significantly reduced in severity when the AC has been on for a while - iStat shows nothing running too hot (HDD sits around 95-110F, most other components the same, the outlier is the power supply which spikes to 120-130 when I'm playing a game or watching some HD video or some such.
Why would having the AC bringing the ambient temp down 5-10 degrees provide such a massive performance difference?

Answer 1

It could be the quite a few things, If you have an external drive FW800 why not install a system on that and run with that. If it still works when the machine is hot you have ruled out the mem/cpu/power supply and lots of other items. That leaves the disk and controller (the controller being on the mother board) and hard drive fan.
You should be able to check the fan, then you will need to spend on a disk but at least you will have ruled many items out before hitting the wallet. If the external disk works and if after changing the hard disk it still fails you probably have a controller fault, that would be expensive.
It may be worth trying to keep the machine cool when you have it fixed, it will extend the life of all the components.
regards