You should talk to your faculty advisors.
Withdrawn Fail will show on your transcript.
It will also have an impact on your GPA calculation. The subject is counted as a fail, which is the lowest GPA contribution you can get -
http://www.monash.edu.au/exams/gpa-wam.html .
So, caution if you need your GPA for anything (Postgrad med, ect).
It shouldn't affect your WAM heaps...it really depends. WAM is just the simple average of all the subjects you've taken so far. So, Say i got:
Chem:80
Bio:89
Philosophy:43
Math:54
They simply (80+89+43+54)/4. To get your WAM, by the end of this year i assume you would of taken 8 units so its now (80+89+43+54+x+y+z+w)/8 and that equals your WAM. As you can see it works out a lot better. The GPA is kind of a silly scale in my opinion, it assigns arbitary values to grade ranges rather than the actual grade you received. A fail will really bring down your GPA, it isn't a fatal event though. It'll smooth out in later years with good marks. It won't be as hard on your WAM assuming you've done alright so far in the subject you intend to drop.
To be brutally honest, if you think you will fail it, thats your own self assessment, i won't doubt you or try encourage you. If you think its an uphill battle and you've done pretty bad already i'd just cut my losses and write the subject off, drop it. If you're going to do bad either way it hardly matters and at least if you drop it you can focus on your other subjects a bit better. That said, even if you stayed in and put in minimal effort, you would get a higher mark than dropping out now. Surely, you'd get at least a couple things right on the exam with no study or extra time input. So, thats another valid option, continuing it. 3rd option is pull up your socks and work 110% at it and hope for the best.
Do tell us what you choose, just out of interest anyway.
I also recommend you read this -
http://www.monash.edu.au/enrolments/change/unit-discontinuation-penalties.html .