Please help me diagnose my computer! I'm getting quite desperate...

Hello, I've had my macbook pro (snow leopard) for 2 years now. I rarely download anything on it, nor do I save files other then school documents and pictures. I had 230GB out of 256 GB still remaining.

Everything was going smoothly, when quite suddenly, my computer started beachballing. I noticed that this happened when I was watching a youtube video that was an hour long, but I kept it playing on repeat (it was a video of "white noise" to help me study). It beachballed a couple of times during this session, but at some point my computer was lagging hard so I exited. The problem is, from this point on, my computer still beachballs. Sometimes it will work smoothly, but it's only a matter of time until it lags again. This problem is NOT safari specific. Even if safari is completely closed, it will beachball. I can move my mouse, but I won't be able to click anything or even force quit an application due to the lag.

Other things to mention: Repairing disk permissions doesn't solve it, neither does resetting PRAM. Often times I have to force shut down because my computer may be completely unresponsive, and when this happens, the fan gos nuts. Sometimes when I turn my computer on, I'm stuck at the grey screen, and I have to force shut down again.

One other important thing I do want to mention is that I tried to reinstall mac osx with the original CD. I clicked Macintosh HD (the only partition), and clicked erase. I tried installing it 2 times. For both times it took around 5 hours, and in the end it said it couldn't install. So I redid it one last time by following these instructions: http://support.apple.com/kb/HT3910. It still won't let me install!

Can someone help me please? Badly need to study for exams and I'm upset that my new [expensive] computer won't work!