WD HDD: "Read Element Failure" causes other drive not to boot

On a WD 320GB SATA HDD, using the manufactures utility I received a "Read Element Failure" code 0007. I did a 'Full Media Scan' and it supposely fixed the problem.
I contacted WD and set up a RMA, but thier 'farmed out' support couldn't tell me what the error meant and there was nothing on their web site.

The orginal issue was, I have two bootable drives (the other is a Seagate), this problem kepted both drives from booting (not at the same time though). They would only boot up to the first Windows splash screen and stop. If I disconnected the WD drive the other drive would boot fine. The WD wouldn't boot either way, which I would understand.

Questions:
1. Does this "Read Element" mean the heads?
2. If so, how could software 'fix' a bad head, or could it be the controller?
3. How could this stop another drive from booting? Something corrupted between the two drives? (The drives will boot by separately with the other disconnected.)