Recently, my computer is prone to a strange power related (I think) problem. The montior would "lose signal" as it were (i.e. the monitor is still on, but it gives a "monitor shutting down" message).

If I have, for example, music playing it will do that looping problem. The power LED also stays on. This suggests the computer is locking up too. When I reboot the pc, I get a BIOS error message saying "Hardware monitor has found a problem", so I go into BIOS setup --> power --> Hardware monitor. It gives the mobo and cpu temperature, and some power statistics. Next to "+12v" the field is in red, and hangs around 10-11v. I have no idea what is happening, and any advice would be helpful. Is this just a monitor problem?

It sounds like the primary issue is that the system is locking up. When this lockup occurs, you get the dreadful audio loop and the graphics are shutting off (causing the monitor to go to standby mode).

I'd say that your motherboard's hardware monitor is doing its job and doing it well. What it is telling you is that the voltage supplied on the +12V rail is too low. This type of problem can cause many problems from system lockups, boot failures, and component damage.

I recommend that you replace your power supply with a compatible one. If you are not sure how to check for a compatible power supply, take your entire machine to a local shop that you trust (try to find a small shop since the big name guys (Best Buy, Circuit City, etc) usually employ kids that know next to nothing about computer components) and ask them what type you need to replace it with.