turning up in court with opinion from the PC Advisors message boards won't stand you in much stead. My first bit of advice would be to go to the disk manufacturers themselves, they make the things and should have advice on 'soft' and 'hard' bad sector errors, their signs and effects.
You are correct in stating that the reappearance of sector errors after scandisk has 'attempted recovery of bad sectors' indicates that the error is at disk level not software.
I am surprised you lost on the 2 points you have stated above, bad disk sectors have always been an indication of drive problem, especially when scandisk/chkdisk have been run several times and the problem re-occurs, coupled with disk errors and erratic behaviour, this is not normal for a computer and it must have been either a poor case presented by yourself, an excellent (yet truthfully flawed) case by the defence or the Judge/Magistrate didn't have a clue what you or the prosecution were talking about and decided to flip a coin.
Best of luck, I’d hate to see someone lose their money, when the shop owner is clearly talking rubbish.