Correct, there are 32 bad sectors on that disk.
Is the backup already shot? Probably, yes.
Worst case scenario: assume any and all files in that backup set are already corrupted. It's probably not that drastic, but it's more than likely several files have been lost already. even 1 bad sector can trash a 1TB disk image or VHD file. I really don't know how 'spare areas' work in a super technical sense when it comes to bad sectors. I think its a 50/50 thing at best- as to if any system can truly recover the the actual data from a bad sector, and move it to a good one.
At this point, you need to do a full backup of the known good source data (not the data on the nas itself), and put it on an entirely different disk. Even usb disk(s) directly connected to a windows pc would work in this situation.
If a disk is bad, it generally is only going to get worse. I would run the disk check after you have made an adequate backup.
The problem with the 210d units is that they have no internal fan. A horrible buffalo design flaw IMHO. They're heat traps. I wound up opening the cases on the two 210s that I have. They seldom get used, and when they are used- they're used without the lid on them See link. I would NOT do this until after you've adequately backed up your data. Since the drive is shot, you can put a new wiped one in it- and TFTP load it just like a 2 disk unit.
Keep in mind, opening the case WILL void the warranty. If your unit is still under warranty- I would definitely contact buffalo support about getting it replaced.http://forums.buffalotech.com/index.php?topic=24955.0