What do you mean by "defrag my server"? There's a way to exclude disk sectors from being read/written to but it's not worth going this route if several bad sectors start showing up. The latter means a faulty HD.
Ignoring a warning like this will lead to tears. The last three times I'd seen something like this, the drive was dead inside a week. I'd suggest you may find one of these times it simply won't recover and then your data is toast.
Back up right away, and get that drive swapped right after.
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