Ok so called apple care this morning and finally got a rep who sounded like they knew what they were doing. He told me if i was able to use the computer without issues (as I'm doing now) the SMART Error is likely a problem with the OS. He recommended that i do the following:
- Download Lion to an External Drive
- Make sure EVERYTHING on the computer is backed up with Time Machine. Make 2 backups just in case
- Hold option while booting up the Mac and select Disk Utility
- Select Erase Disk and confirm you want to erase the disk.
- Hold option again on Bootup if needed.
- Select your external HD and install lion from the external HD (Make sure to select Mac HD as the destination for the install).
- Restore everything from Time Machine.
I am not going to try this because i have a lot of sensitive work and programs that i cannot afford to take a risk of losing. I'm going to stay on Snow Leopard until i have to migrate to Lion, but please give this a shot if you are feeling risky and post your results.
Again, he was very confident that the SMART Alert had to be a false one and that this would install lion fine and fix the SMART Alert.
Good Luck!