Sorry to hear your having difficulties.When the error appears does it state if it is a 'system fault', if not its unlikely to be a fault with the hard disk.
The error normally appears when there is a problem with your account or its unable to decode the signal properly. The fact you mentioned the card is showing signs of damage, this is most likely to be the cause of the problem.
However if you want to try fault finding the box first, you could try rebuilding your planner:
If this doesnt work, its time to arrange a replacement card, the fastest way is to give Sky a call on 03442 411 653.