For a start you definitely don't want to be initializing any of your VDs as it will wipe all your data!
If you are not having any luck with the RAID tools then perhaps shut the system down and scan the drives on another system using seatools or similar utility. If you find a faulty drive, then boot your system back up without the faulty drive so it can mark the VD as degraded and then replace it with a new drive.
It's also worth making sure you have the latest BIOS/BMC/FRU as well as RAID drivers installed.
That means disk 2 has bad sectors. I suggest you replace that drive and rebuild the VD ASAP.
A few months later and I'm sure your drives were repaired by now but just for some peace of mind you can check this thread: http://communities.intel.com/message/96509#96509
I'm sure that as a one time solution you could have run a consistency check from the ESRT2 bios console.
Also, I am having a somewhat similar problem here: http://communities.intel.com/thread/31015 so if you can share your solution it would be great.