You are not alone, it seems that make and model has
had some issue with that, Palit is known as PNY in North America, they also produce GPUs under the Gainward brand.
Yes, your fan has most likely locked some bearings and needs to be replaced, but I'll tell you it's not very cost effective.
That fact that you're monitoring software still thinks it's turning is fishy, if you've updated the driver recently you might want to roll your driver back to the previous and see if that changes things (it's a long shot), but be sure you use
this to clean the driver that is installed out of your system.
First you want to try to contact the customer support for your GPU and check if it's still under warranty (if you registered it for a warranty).
Aftermarket coolers for your GPU will cost you $30 to $80 US, what you're looking for are something like these:
http://www.arctic.ac/us_en/accelero-mono-plus.html
http://www.tigerdirect.com/applicat...=scplp841871&gclid=CPWi55SYmMgCFZWJaQodiZIDvQ
http://www.newegg.com/Product/Product.aspx?Item=N82E16835186096
Coolers are expensive, and it might be to your advantage to just save for a new GPU, as you can find R9 270X and R9 280 and 280X for cheap now. You can get the R9 280 for $150 at many online electronic outlets.
If you do get an aftermarket cooler, be sure to read the compatibility list, but most are currently compatible with your GPU. They can be a pain to install as well.
If you
consult this list, many of the GPUs above yours (more powerful) can be purchased in the $150 range and cheaper if you look hard.