E00070003 Bad Sector Error on SBS2003

Hi All,
I have a customer who has Acronis True Image 9.1 Build 3,677 on SBS2003 SP2.
HP ML310 G4. 2x 7k 250GB Sata. Raid-1 with 1 logical.

Customer has used Acronis on SBS and term server for some time with successful backups.

I was called when Acronis has started failing on the SBS2003 box.

Acronis starts as scheduled but fails when starting the backup with error E00070003 Bad Sector on Disk.

I have created an aconis report which indicates both partitions are OK.
I have performed chkdsk /r on both C drive and external.
completed an Array surface check on both drives at boot. all ok.
plenty of defraggs on C drive as it was 65%+ fragged. Now about 30%. (after surface scans and chkdsk)
confirmed array is listed as optimal.

With Acronis services disabled i am running a ntbackup now. Taking approx 8hrs for 70GB.
HP Array diagnostics util says no array is detected as diagnosable.
Bootup array util lists both drives connected and lists as embedded Adaptec Raid-1. Intel 82801GR.
00 - ST3250620NS
01 - ST3250620NS

Currently the plan is to complete the ntbackup then pull each drive while offline and complete a seperate test using seatools.

Also discuss/research with HP why the HDD LED are OFF on the ML310.

Can anyone suggest any further steps i can take?

Thankyou
Mitch.