OS X Lion suddenly has two hard discs, one of which "has SMART errors …and cannot be repaired." the original hard disc is fine. What to do about failing HD?

I have an iMac Lion 10.7.5. It has been freezing and iphoto doesn't work, cannot reload iphoto, it does it then freezes the computer. So, I tried to download Maverick, and couldn't as it said " disk has SMART erros and has a hardward problem that can't be repaired." After going into disc utitlity, I find that there is the original hard disk and now a new one that is above it, written in red letters. The original disk is in good shape, all is well with it. The other hard disk is unrepairable and says it is failing and needs to be replaced. I cannot erase it either. What to do? I don't need a new hard drive as the original one is there and says all is well. Help!