Replace the drive. Bad sectors are a good sign of a failing hard drive.
What files did you try to copy over from the old profile? Is that profile now deleted? Are you sure you copied the right profile over?
Go to C:\Documents and Settings, do you see the other profile there? You should see My Documents folder, Favorites, those 2 are really the only ones you need to save generally. Just copy those 2 folders over to the new profile. But before you spend time doing that, get a new hard drive and install Windows on that, then copy the files from the old drive to the new user account on the new setup.