Hi Dr.
The Gateway should have shipped with a Recovery disk of some sort - or at least a recovery partition on the hard drive. Check on the Gateway support site for the recovery procedure for your model (it can vary by model). If you don't have a disk any longer, they might still have recovery disks that you can order for a smallish fee (some cost more than others, in the past some were around $21 USD).
You might want to run diagnostics to see if the hardware is still OK or not. The defrag might have failed because the hard drive itself is failing. Might as well check the memory too.
Hard drive diagnostics ---
http://www.tacktech.com/display.cfm?ttid=287
Memory diagnostics ---
http://www.memtest86.org
Best of luck
. . . Gary