Err1Err3

HP Pavilion m8277c desktop
Vista Home Premium

Earlier today, I booted up the computer and got the following message:

"disk read error, press Ctrl + Alt + Del to restart". When I do that, it just takes me right back to that same message. I also tried booting into system Set-up, and choosing "Load System Defaults", but that didn't work, either.

Finally, when I tried booting to F11 System Recovery, it took a very long time (~ 10 minutes), then I got the "Err1Err3" message.

Now, in an attempt to recover data, I've connected the hard drive to a second working computer. All I get are repeating sounds of the drive connecting/disconnecting, and pop-ups with "need to format Drive J (and K) before use".

Are these symptoms of a failing hard drive? Is there a chance my data is lost? All suggestions and input is greatly appreciated. Thanks!

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