Hey there, pizzalatte.
I'm afraid that formatting the drive won't help with the bad sectors. The first thing you should do is to backup your important files right away (files like photos, video, documents, projects, etc). Leave the games as they are downloadable/reinstallable, you could just save your Save Game files so that you don't lose your progress.
Have you gotten any issues from that drive yet? Any unusual sounds/noises coming from it, freezing/hanging your system, etc?
Unfortunately when bad sectors start to occur, this will continue until the drive inevitably dies. And to make it even worse, there's no way to know how long it's going to take. It could be days, weeks, months or even more.
Once you've backed up your data, I'd advise you to get in touch with the reseller you got it from or the HDD manufacturer's customer support and ask about RMA if it's still under warranty.
Hope that helps. Please let me know how everything goes.
Boogieman_WD