El Capitan woes. Safe mode, Hardware test do not work. Restart loop, kernal panic. Any sugguestions?

I have an early 13" 2011 MacBook Pro. It had OS X Lion when purchasing.

Two years later I upgraded it to OSX Mavericks.

Less than a week ago I did a CLEAN install of El Capitan. Wiped my HD and installed El Capitan. I did it with a bootable USB flash drive. The installation went fine. All through the years I did disk repair/verification, repair disk permissions when it was necessary. I have a 500gb hard drive installed and I kept about 200gb free most times. Before and after installation of El Capitan, Disk Utility has shown repeatedly the hard drive was in healthy condition.

Just last night I woke my computer from sleep mode it seemed to be frozen.

Some apps still running - Google Chrome, VLC.

Mouse still worked. Any click from mouse or track pad would not effect anything on screen.

I pressed Command-Option-Esc to get to force quit and quit Chrome through there.

Then I restarted, went to apple screen and progress bar, but then hung on a blank grey screen for about 7 minutes.

I shut it down. I disconnected ALL peripherals.

I restarted holding down option key, same outcome

I restarted holding down D key, same outcome.

I reset NVRAM, and SMC with same outcome.

I restarted again and realized the progress bar WAS actually progressing just at an incredibly slow rate. So, I waited it out and it finally did come back to the login screen. Im talking 20 minutes plus.

Once I finally got to the desktop - I did another disk check and it said everything was fine with my hard drive.

I checked activity monitor and didn't show anything clogging up CPU or memory.

I cleared out any login items (system preference>users and accounts>login items) that could be causing it.

I would have checked disk permissions even though i doubt it would have helped, but it looks like El Capitan doesn't provide that feature in Disk Utility anymore?

I then tried the same - restart + hold down D to see if i could run some sort of diagnostics, something! but it still just booted up to login again, but it bit faster this time.

I thought I was in the clear, but after restarting one more time it would go to apple logo/progress bar and then show some odd code on top and then direct to the message "your computer restarted because of a problem, press any key or wait to continue".... etc in various languages. The computer will begin to restart again only to do the same thing.

I shut down then reset PRAM, SMC again.

I restarted in recovery mode to check my HDD. Well, now for the first time ever it is telling me theres something wrong with my drive and cannot be fixed. I find it so odd because it was working fine on Mavericks and Lion for years. I never had any problems - booting up or hard drive related.

Well it finally allowed me get to Apple Hardware Test. Clicked "test" and everything seemed to be going fine until 2min 0s mark, very end of progress bar it froze, trackpad would work, but mouse would be unresponsive by seconds. Im guess its a hardware or hard drive issue then? Failing drive? DOnt know how installing El Capitan would casue these things....

If i were to get a new drive and just start anew, will I be able to reinstall my programs purchased from the app store? The only one I have right now is Logic Pro. On a PC right now and cant find anyway to see my purchase history. Checked apple.com and shows no purchases for the last 90 days so i guess I must check through itune or the actualy mac app store?

Thanks for reading and any help is greatly appreciated.