EMERGENCY - please help

Hi guys, I'm a new member of this forum. Right now I am posting this in Recovery Mode on my Macbook Pro. I'm having an exam in 2 days and now I am stuck fixing my laptop
My laptop is the early 2011 model 2.3 Ghz Macbook Pro. Since I bought it I haven't done any modification to the hardware. All I have been doing is surfing Internet and recently I have been playing Diablo.
I take care of my laptop but it fails me.

Recently I experienced terrible performance on my laptop. Starting with whatever that has to do with flash, anything, music from myspace, Youtube ..etc.. that is played on Safari, it just freezes safari and my Mac very often. Whenever I play Youtube, it normally plays smooth for 1 or 2 videos and then start freezing up, the video would be frozen but the sound still goes. It's very annoying.
Until 3 days ago, my Mac just goes frozen, everything, Finder, VLC ..etc.. in a time interval. I could not even watch a movie on my laptop, VLC just got frozen every 2 minutes. Even when I use Finder to open through my files, it just freezes often. I had to restart before being able to watch a movie.
Eventually, yesterday, everything goes back again. I thought the restart fixed my issue. Suddenly my whole macbook freezes. Let me say this again, MY WHOLE MACBOOK, everything. I have never experienced this, even my mouse, I could not do anything other than hitting the power button to force restart.


After this, I can't get my Macbook to boot up. It would not go pass the grey screen. The first time it starts up, it took me 30 minutes to fully finish the loading bar at the grey Apple screen. It let it load, thinking it would take a while then everything will be back into places. Then it shuts down. After that, I tried like 10 times but nothing happens, after passing the grey screen the macbook just shuts down itself.

So I went into a Hardware test. I tried several times but It always stucks at Pass Item 1, testing items. It would come to a phase when the mouse responsiveness is very slow and I could not stop it by Command + . like instructed but had to force shut down.
I went into Recovery Mode, verify my HD, repair it. I believe my HD is fine, the S.M.A.R.T status says verified. I'm lucky my Hard Drive is not failed. So I erase my whole HD to restore it fresh.
I have everything backed up on a WD Mybook 2 TB Hard drive. However I cannot use this by any chance because I foolishly encrypted my whole external hard drive. Normally everytime I plug it in I had to put my passcode through an application called "WD UNLOCKER". Now that I can't access to anything except the Recovery Mode. I could not unlock my HD to use the backup. I did try the Backing up from Time Machine option, however my Time Machine HD would not show up, simply because it is not unlocked yet. If anyone knows how to unlock this, or to access WD UNLOCKER from Terminal, please tell me.

I tried reinstalling Mac Os Lion from the Recovery Mode. The first time I let it start and went to work. After 6 hours I came back and it was stuck at "Downloading additional components .. ". It would not change, it was stuck. My internet connection is VERY stable because during the whole time, i use my iPhone to access the Internet.
I tried the second time reinstalling Mac Lion last night. It was going all right. It finished the first phase then got into "Downloading Additional Component" again, this time it was going VERY VERY slow. So I slept for 4 hours, I woke up this morning and saw my laptop screen on the Recover Mode with the 4 options shown, nothing has changed. I didn't know what happened but I don't think I will try downloading 4 GB of Lion again.

Last night, I also try installing Mac Leopard from the startup disc. But it took very slow. Nothing froze but the ETA was stuck at 21 minutes remaining and it would not move. So I think I will try this again today and leave it while I go to work.
I need to install some type of system on my Mac in order to get access to my Time Machine backup HD and restore it. If my Snow Leopard install is successful, I will upgrade it back to Lion by any mean.
So I will leave this post updated until my Mac is fixed. I will try to install Mac Leopard from the disc now.
Thank you for paying attention to my post and read the whole thing. Please, please help me with this.

 

seems like no one can help Installing Mac OS Snow Leopard failed.
" Could not copy necessary support files "

 

Thanks laetusviator, I already tried that and didnt work
Personally I hate bringing my laptop to Apple store, firstly because everytime I talk to an employee, they seem to have a very limited knowledge. Secondly all the stores are bloody far from my house. But I guess I have to try this option afterall