OS will not load after Windows Update; hard drive failure message

Long story short:

Had issues with Windows Update (would not download/install properly), then one day last week, system restarted and now Windows will not load. Safe mode, normal mode, recovery mode all do not work - they just result in a black or blue screen with a visible cursor. To make matters worse, booted in startup check mode and performed a hard drive test which resulted in the following message: "failed - replace hard disk 1 (warranty TD - error code 10008). What are my options? My main focus is to recover my personal files. Thanks in advance!

Welcome
Ill give it to your straight. Sounds like a hardware problem, specifically harddrive.
If it is the hard drive you may have lost everything already. If hardware, excluding harddrive, your worst case scenario, you can take the hard drive and access with another computer. If it is not a hardware, but rather a software problem, back up your stuff with this procedure
Use Ubuntu Live CD to Backup Files from Your Dead Windows Computer - How-To Geek