You're probably going to need a new Hard Drive
Dropping your laptop has very likely damaged at least the hard drive. Your ultimate boot CD likely has some kind of hard drive test tool, if you want to look for it. If not, your live CD should be able to give you a more basic test (search for "drives" in the Unity launcher). You can also try Drive Fitness Test for a more thorough test of your hard drive, without the kitchen sink of UBCD.
It doesn't matter what operating system you have, if the drive is bad, the drive is bad. Platter-based (non-solid state) hard drives are kind of like fancy record players - they have a read arm and disks that the read-arm reads. If you scratch one of the disks, it no longer works and you lose the data on that portion of the disk. If you break the read arm (ever hear clicking from a drive? That's a broken read arm), your data isn't technically lost, but recovering it without sending it to a professional with a clean room is unlikely (and becomes increasingly unlikely the longer you try to use the broken disk; just like a record player - if you damage the read arm or the needle, you can't use it any more, and if you try, you risk damaging your records).
You may not need a new copy of Windows
If your laptop came with Windows (ie - you bought it from a retailer such as Best Buy), you should have a sticker on the bottom with a CD key. You'll have to have a disk that has the same version of Windows, which you can borrow from someone or download from the Internet (the key is what's valuable, so downloading the installer is kosher, Microsoft might have Win7 on their site, but since it's no longer the newest, it might take a little digging).
If you bought your own copy (such as to upgrade from XP to Win7, or a custom build), then you can simply repeat the process of installing with the same disk and key.
(And yes, both of these methods are kosher. The licensing is that a given copy can only be installed on one machine at a time. Your license key was freed up as soon as your drive was rendered unusable.)
There's a chance the automatic activation process won't work. If that happens, simply call Microsoft with the phone number the installer gives you. They're usually pretty good about activating it for you (most of the time, it's all automated).
Alternatively, of course, you can just install Ubuntu and not worry about Windows licensing, but that's up to you.
Back up your data right now
As I mentioned earlier, if your drive is damaged, it's only a matter of time before it fails completely, or corrupts data you have. Get it off as soon as humanly possible, and don't use your computer any more than absolutely necessary before you back up your data. For all intents and purposes, your drive is a ticking timebomb before it fails completely.