Speaking from someone that works inside the laughably self-proclaimed electronics industry, your hard drive should not crap out once every year. If it does, then you are doing some very bad things to it. Things that should not be witnessed to in front of blind children...or you could be trying to push it past its comfort zone.
Note for the zealous gamer: Do not count on a laptop as your main gaming rig. It is just a bad idea overall, and even with the addition of upgradable video card slots, it simply isn't worth the money, time or frustration.
There are mainly three causes of overheating.
1) Pushing the processor past its limit by forcing values (commonly known as overclocking.
2) Inadequate fan speed or airflow (cooling in general).
3) Outside sources of heat or faulty components.
I once had a customer that sent in the same HP Pavillion roughly three times and complained about the chasis feeling hot to the touch. Said customer forgot to mention that the imbecile was putting this thing down on top of a wool blanket on top of his lap. As you can guess, the blanket soaked up the heat.
To the original poster, the fact that it crashed, then you guys forced it to start again and again, upon which it kept crashing leads me to believe that the laptop was being powered on without the fan, which is where your burning originated from. Any computer that is powered on without a working fan/powersupply will immediately commit seppuku out of its safety tolerance if it happens to be working in the first place. If it's a laptop with the fan attached directly to the power supply (like in a pc), you need a new power supply for sure and that's what crapped out on you in the first place, otherwise, the fan just probably blew.
It happens more than most people think, and if you doubt me, search the internet for people who have complained that their lcd monitors, which have no moving parts, started smoking and caught fire. You will find them. They have to exist cause someone won't stop sending in this garbage to our little junk shop, ie: LG. I don't think that any of us could give you an accurate description of what might be at fault just from what you have told us as laptops are very proprietary and every single one has a slightly different design. My advise to you is to see if any warranty still exists, either with the company or the individual part manufacturer, then if you want to front the cash, send it in to an authorized repair center or some place like Gigaparts before you throw the whole rig away. Laptop parts break. It happens. If you were to replace your laptop after every little mishap, you'd be a very poor person in the long run.
Don't be too worried though, it is far more likely that a component burned out near the hard drive and scarred the outer casing. If the hard drive itself was going bad, you would smell it. You would smell it in a heartbeat, and the smell would not be mistakenable for burnt toast. It smells a bit like sulfur and forest fires, with a touch of dust.
If the laptop is too old for repair, then maybe it is time to get a new one? Ubid, ebay, and entry-level business laptop deals are always a good start. From the sound of it, this girl does not need to be using the laptop for anything excessive anyway.
Good luck to you.
Oh, and if there is anyone out there that runs over their laptop a month before the warranty expires: Stop it. It isn't funny and we can see the tire marks.
Well, it's a little funny..