CRC Errors when Validating Vault

We are using the latest Server build (39029). The problem started when the customer called and said he was trying to restore an image to a backup server. He kept getting unable to read disk errors. I picked up his backup server and backup. Here is what happened:

1) I restored with the ABM. No errors but the restore only took 20 minutes which is impossible because it was a 260GB TIB.
2) Of course it didn't work. The server went in to a continuous reboot cycle when I rebooted it after the restore.
3) I did a vault validation on the external USB drive where the backups reside and toward the end it failed with repeated validation errors "Data Error (cyclic redundancy check).

So...

1) Does this mean the external USB hard drive had developed bad spots?
2) If so what didn't it report the problems while backing up?

It scares me. There the backup says "We are good. No problems" yet the restore didn't work. Yes it is all about my data and it scares me.....