|I think you are wise to replace the drive.|
Many older hard drives and most newer ones have only a 3 year warranty.
Seagate has seen fit, since about 2 years ago, to extend that to 5 years for most of their hard drives, and a few other makers have some models with that too.
There are all sorts of reasons for rebooting. Some are caused by software problems, some by hardware problems (e.g. most often a faulty power supply, or overheating of some sort).
But you should not be finding bad sectors.
If the boot cd program found some, hard drive diagnostics will probably find more than that because their tests are more thorough.
What DAVEINCAPS mentioned can happen if you copy a whole partition that has actual bad sectors to a destination that does not - the table that keeps track of where bad sectors are within the partition is copied as well - in that case the bad sectors are falsely marked. That is very difficult to fix in XP and below without deleting the partition, but can be fixed in Vista.
However, you won't have problems with the data on that destination because of bad sectors, because they are not there.
What jefro mentions is only of use if you have only one or only a few bad sectors, and more do not appear over a reasonably long amount of time - otherwise it's inevitable the drive will fail, and a waste of time.
Most hard drive manufacturer's diagnostics will quit testing if more than a certain number, e.g. 100, bad sectors are found, or if SMART has been tripped with certain errors, because that indicates the drive is definately dying.