Disk Utility says disk is corrupt after running fsck -fy
Honestly, you don't mess around with these messages. I think that the first thing to do is to make sure you have a complete backup of your hard drive. Get a second drive with enough capacity. Use Carbon Copy Cloner or Time Machine, or Super Duper to copy the drive.

Once you have a backup, you could easily reformat the drive, (this will avoid bad sectors), and then copy back from the backup.

My 2¢ Hope this helps..