Sorry ... I didn't say it explicitly, but your drive needs to be replaced ... the SMART error should be sufficient for Dell to send a replacement, but they may have you run the full diagnostics I sent the link for (or the ones available from F12 during POST).
Hi, my shiny new Dell XPS 17 laptop arrived 2 days ago, but I am having a Windows (7) problem...   Every 10-15 seconds the blue spinning circle by the mouse pointers sets off, for 5-6 seconds. You would expect this to happen from time to time when something is going on in the background, however it's happening ALL the time, i.e. every 10-15 seconds, even if no applications are open.   I have to admit I'm getting very frustrated by it.   Does anyone know why it is happening, and how can I stop it??   Thanks  
Spinning Blue Wheel of Frustration