No problems, whatever you decide. There's certainly no harm in formatting if that's easy enough for you, but all the evidence is pointing to hardware. If you do decide to use an external drive to copy your files, you can only really do this for your personal files, music, documents etc. Most apps will install files into other area's too, such as your common files folders, and windows folders. Some also create registry settings during installation, which are impossible to copy individually. You'll need the original installation files or installation CD's.