Use the Windows 95/98 boot disk to run the scandisk.If you are running the program off of your hard drive, the bad sector could be on the area where you are running the scandisk program.
It may still lock up on you if there are too many bad sectors
If it doesn't work, see if the hard drive is still under warranty.
Most hard drives have 3 years warranty on them. You don't need the original reciept on them, just the manufactured date and the serial number on the hard drive.
I called IBM and Fujitsu and they both had no problem with replacing them for me.
Find out which company makes your hard drive and call them for replacement.