I was not trying to make a post about whether or not to fix a computer, but what factors go into that decision. I seem to be making these decisions a lot and will continue to in the future as it seems to be part of life.
I know you just said this but I am going to comment anyway, and ALSO comment on the decision making process.
I personally would fix it. I would also try to get the files off using a live Linux disk/USB. In fact, I recently did that very thing, although with a desktop, 7 years old. Boot sector got fried. Used Ubuntu live disk to copy my files off to an external drive I had. BUT then I was wisely advised I could get a new 1 TB hybrid SSD (Seagate) for about $63. (Smaller ones would be cheaper if you don't need that much space (my original HD was 1 TB so I needed it if I wanted to clone the old drive, also a laptop drive will be more expensive so YMMV). Anyway, I managed to find a cloning program that worked (they can be finicky) and got my old HD cloned and up in running, thus saving ALL my software and games and everything. Now, it took me literally all day (many false starts, many breaks, some swearing), so you have to figure what your time is worth.
Decision making-wise, to me, to get another year (or very likely more) out of this machine that doesn't have anything else wrong with it (I assume) is definitely worth it, both in terms of dollar value and in terms of being environmentally conscious. If it still does the job it is meant to do adequately if fixed, then fix. (But make sure it is really the HD and not, say, the motherboard or power unit.) AND, if you are shorter on cash than time (which it sounds like you are), that is another good reason to try to fix it than just chuck it.
Any way you slice it, it will allow you to save more for the car you are definitely going to need to buy.
Also... you didn't ask this, but if you know you will need a new (to you) car very soon, and it sounds like it (blown head gasket is bad news), I would personally actually STOP contributing to your 401k briefly, or just contribute up to the company match, if you get one. Start looking immediately for a car. Once you find one you like and can afford, immediately start re-contributing, and actually increase your contribution % if you are able to (tighten belts, do whatever it takes), to get yourself back up to where you would be had you not paused your contribution. It is only July, there is plenty of time to max the account if that is what you are aiming for. And even if you aren't contributing 25% is awesome, and way more than most people, but there is nothing saying you have to. It is great to try to hold yourself to it (I do myself), but for situations like this I would personally give myself a little breathing room and improve my cash flow for a short time.
Whatever you decide, good luck!