Disclaimer - For me the Apple Support Communities are an international user to user technical support forum. As a man from Mexico my first language is Spanish. I do not speak English, however I do write in English with the aid of the Mac OS X spelling and grammar checks. I also live in a culture very different from that found in most 1st world nations, such as that in the two dominant North American countries. Written language has no tone. When offering advice in the ASC, my comments are not meant to be anything more than helpful and certainly not to be taken as insults.
If the Mac is under warranty, the Mac App Store is a vital part of Mac OS X and the Mac ecosystem, since the Mac cannot be repair, call Apple Care and have them make arrangements to replace the Mac under warranty.
Be sure to prepare for the new Mac by backing up your content. I suggest not cloning the old Mac or doing anything that might transfer whatever ails the old Mac to the new Mac.
Thank you Dah.veed. Unfortunately this computer was purchased in the UK and I work in a country in Africa where there are no Apple stores, which is why I took it to the Apple store in Johannesburg to try to have it fixed. This machine was purchased in December 2010 and this problem was always there. I didn't think it was important until Apple decided in its wisdom to update the OSX via the App Store, with no thoughts to those who live in countries where the internet is limited and expensive. They latter released the new OS in a thumb drive, but now they are saying they may not do that with the new Mountain Lion. But I digress... Which is why I need to get this issue resolved or I will get stuck with Lion.
Buy an external SSD and install Lion on it as if on a new Mac. Boot from the ext SSD and see if the problem persists. If it doesn't persist, replace the internal HDD and start over. To save money, you might ask someone to help you get an ext SSD that can be removed from its casing and be installed in the Mac.