SpinRite works to identify bad sectors on a track on magnetic media. Once it locates a bad sector, it attempts to re-read (repeatedly) the bitmap from that sector. If successful, it will re-write that bitmap to an unused sector, mark the original sector as bad, and provide a pointer in the index of the drive to the newly created sector.
For me, SpinRite has successfully corrected fubared Windows installations (STOP error at boot, unreadable boot volume, registry .xxx missing at boot time, etc), repairing a disk with a FileVaulted sparseimage (allowing it to mount), repairing a disk that was TrueCrypted (allowing it to mount), as well as repairing a drive enough to the point where I can make an image copy of it and recover atleast some (and in some cases, most) of the data on it.
SpinRite is also the only tool I'm comfortable running on an encrypted volume.
It's not voodoo, and I run it quarterly for maintenance purposes.