I believe I also had this error a while back. That's what caused my format.
Fortunately, I didn't have anything but a bunch of games and stuff on my computer, so it was easy. If you've got anything that needs to be backed up, the £40 would be better spent on another hard drive. Put the Windows CD in, install it on the new drive, then you have access all of your files on your other HDD. You can back these up, then format your original drive. Now you've got a new HDD instead of having someone else format your original hard drive. That's what I'd do anyway.
If you don't: have the money/want to use the money/know how to or feel uncomfortable about putting in a new HDD, you could attempt to do the CD recovery thing, but I couldn't do it and ended up formatting. I didn't have the money to get a new hard drive.
Good luck getting it fixed.