I've run the update, agreed to the restart and now my MacBook won't restart ***?

What backups do you have?

There are several ways to back up a Mac that is unable to fully boot. You need an external hard drive to hold the backup data.

1. Boot from your recovery partition (10.7 or later), a local Time Machine backup volume (10.7.2 or later), or your installation disc (10.6.8 or earlier.) Launch Disk Utility and follow the instructions in the support article linked below, under “Instructions for backing up to an external hard disk via Disk Utility.”

How to back up and restore your files

2. If you have a working Mac, and both it and the non-working Mac have FireWire ports, boot the non-working Mac in target disk mode by holding down the key combination command-T at the startup chime. Connect the two Macs with a FireWire cable. The internal drive of the machine running in target mode will mount as an external drive on the other machine. Copy the data to another drive.

How to use and troubleshoot FireWire target disk mode

3. If the internal drive of the non-working Mac is user-replaceable, remove it and mount it in an external enclosure or drive dock. Use another Mac to copy the data.

1. It's always present, except in unusual circumstances.

2. You have to back up before you try to solve the problem.

3. Yes.

1. OS X Lion: About Lion Recovery
2. Start by trying to repair the volume in Disk Utility. If that fails, erase and restore from backup.
3. Apple - Support - Manuals

Hard disks can accommodate a certain number of bad sectors by reallocating spare sectors. Once this limit is exceeded, the SMART status reports drive failure. It is possible that installing the update wrote to sectors on your disk that were determined to be bad, which pushed the reallocation count over the limit.

chopstik |/ wrote:

Thhanks Llessur999. Disk Utility SMART status is reporting "Failing". Will a complete re-install fix those bad sectors or is that a physical harddrive defect?

Time for a new drive

Re-install will not fix the bad sectors. I have tried tools in the past that claim to diagnose and repair SMART drives, but that is very time consuming and mostly not successful. For example, even when I thought the drive was repaired, it would again fail after filling up to a certain point a month later. Not worth the hassle.

Get a new hard drive, they are reasonably priced and easy to install. Over the past year I have bought two Hitachi Travelstar 500GB 7200RPM 16GB cache 2.5" SATA drives from Amazon.

If your MacBook is not new enough to have Lion Recovery built into EFI, you will need the OS X CD that came with your MacBook to install on the new hard disk, then re-download Lion from the App Store. If you have another Mac or an external hard drive, there are other options. Linc Davis provided good info in his first message. Be sure to read HT4718 to which he provided a link.

If you don't have a current backup, consider getting a cheapie SATA USB external hard drive enclosure from Amazon for about $5. If the defective hard drive operates well enough to mount, you can recover important documents, etc.

A hard drive will fail when it is being used. Installing an operating system update or application probably exercises the hard disk more, and writes to more unused sectors, than most other activity you perform. So failing when installing an update is not surprising. It did not fail "as a result of an Apple supplied software update" any more than your car failing on the way to lunch would be "as a result of driving to Panera."

It is theoretically possible your hard drive had undetected bad sectors when shipped, that were not discovered until three years later when first attempting writes to those sectors. That might have pushed the bad sector count over the threshold. But there is no way either you or Apple could know one way or the other. If the failure were discovered during the warranty period, Apple would have responsibility.