A scandisk with surface scan should tell you pretty definitevely whether you have a bad disk or not.

If the drive does, in fact, have bad sectors you probably need to go ahead and chunk it. Where is one, there will be more popping up soon. You'll be getting calls from the person getting the machine wanting to know why programs won't load and files are corrupt, and if you're not careful you may end up getting blamed if this person gets agitated enough. Don't knowingly give somebody a drive that is on its last leg.