Your disk is stuffed - If the S.M.A.R.T health status is "Bad" the manufacturer thinks the disk should be replaced, ie Failed SMART tests = needs to be replaced (free if under warranty).
Unfortunately a check of the Seagate Warranty site indicates your disk is out of warranty - no surprise really as a 320 gig hard drive would be pretty old.
I would approach the seller asking them for a replacement/refund - if they provided you a 1 year warranty, they are really obliged to provide it if the SMART results come back negative, regardless of whether you kept the packaging. Further, an RMA is not something you get with the drive, its something you get when you initiate a return process - and there is no special paper or form required - indeed it does not even have any legal weight, its simply a procedure implemented by vendors to track a returns process.