Does indeed sound like a HDD issue. Backup and be safe.
However, I noticed when running in WinXP that my HDD does tend to make way more noise than under OS X. And I mean way much more noise. And it doesn't seem to have come to any harm so far.
Well, I just got 360G external HD and backed up my mac. Tomorrow I will call them up and see what I have to do. Every once in awhile I can hear the HD racing. I have to hurry and get out of all my programs and shut down.