For the past two weeks, my PC WIFI has been disconnecting randomly after every day or so, sometimes twice in a day.

Once it disconnects, it does not connect back to the network and I have to restart it. There has been the odd time when I restarted and no WIFI network at all was detected THOUGH it works majority of the time.

I have tried it with mains (initially thought it was my battery but the issue persisted).

I tried resetting the WIFI settings and also did a soft reset of the PC. Whilst the soft reset has not solved the WIFI issue, it seems to have stopped the blue screens that used to preceed it.

Also, I NOTICED that the WIFI signal strength is continuously changing which was unusual.

The laptop does have some hardware damage.

Try with some usb wifi dongle and see for the results. Try with other/new router if you can. Disable saving energy option within drivers properties.
To LOOK for cause of BSOD you should go for blue screen view (nirsoft) and you can find the culprit. Program is free and portable (no NEED for install).