To test it, you can use a boot floppy for Windows 98 and run the setup from the install CD. It will automatically run a scan disk and test your hard drive for problems. If it finds any, cancel the setup and replace the hard drive.

There is a low likelyhood that you will be successful in restoring any files from your old hard drive. You can get another hard drive up and running with an operating system with the old hard drive as a secondary drive. Try to copy your old files to the new hard drive. You will probably get some data off, but most likely get errors for other files.