Also, if I need to take it in for service, what would be a good way to hide or encrypt sensitive information?
Virus:
agree esteel - sounds Trojanish - virus type of thing.
Full scan with reputable AV program first thing. if at all possible, your dodgy drive shouldnt be the one running the AV, if its tied a bad .dll to a windows process, itl have trouble removing it if your drive is actually running as the OS.
Hardware:
you could try a stress test program. see ->
http://www.ultimatebootcd.com/
If it is a heat problem its usually when your busiest, or graphically intensive.
If thats the case, amongst other things like cleaning dust, crap, from heatsinks, checking fans and airflow, check the CPU to Heatsink joining.
bad contact or poorly applied heat transfer compound and you get glitches all day everyday.
sensitive data :
It depends on whats sensitive.
Windows stores data all over the damn place. its very hard to cover up sensitive data. just a few basic utils and i can have all your (deleted) photos recovered, as well as documents, websites, passwords et al. and not just from the filesystem. The slack space and registry have residual info too.
You're quite right to be wary of this stuff. Technicians are renowned for looking where they shouldnt..
have you an old hard drive you can wipe and then re install a basic Windows on that?