1.) Norton Internet Security is good but typically has a cost factor (well the last time I look it did), where MSE is free. It is your call
2.) If the drive is running fine now, I see no reason to RMA for a replacement / repair of the hard drive. It doesn't sound like it as a permit issue with the drive but just an error you encountered during the formatting process (typically, you can't format a drive when it is the C drive from the OS).