Before you start thinking about buying a new HD, consider a reinstall of the OS. Which version of Windows is it running, and how old is the install? Windows has this annoying habit of degrading over time; it's what happened with my laptop after about 3 years. You can coax it out for a while with a recovery disk and use of chkdsk /p for a while (I kept mine going for a whole year like that), but eventually you'll just have to reinstall - at which point suddenly it's all running absolutely fine again, whereas just before the reinstall you would have sworn the hard drive was on its last legs and dying!

If you're running XP but don't have disks, I have a recovery CD you're welcome to try. Even if you don't have the disks to do a fresh reinstall, it should enable you to get the laptop working again so you can get the data off; I have a W2K install disk you could use so you'd still have a Windows system to enable you to reinstall the payroll software (which I'm presuming you have the disks to hand for).