EXTERNAL HARDDRIVE RECOMMENDATIONS

Seagate 7200.11 500GB Drive (5 year warranty):
http://www.newegg.com/Product/Product.aspx?Item=N82E16822148288
$89.99

ICY DOCK MB559 Enclosure (3.5", internal SATA, USB 2.0 & eSATA out):
http://www.newegg.com/Product/Product.aspx?Item=N82E16817198003
$29.99 (after rebate)

you won't need any drivers for the enclosure. it should just come up by itself like a flash drive would since XP can handle generic volumes & USB without drivers.

If you have an eSATA port on your computer, by all means use it for the connection to the external drive. That interface is faster than USB2 for sure, and a bit faster than IEEE 1394a (aka Firewire 400). If you are doing as suggested by xxjudgementxx above - buy separately a case and a drive, then assemble - pay attention to BOTH interfaces. Get eSATA between computer and case, and a SATA II HDD to fit into a case that accepts a SATA II drive. That way the "interface" between your eSATA controller and the actual HDD will really be just connections with no intervening chips and buffers, and it will work just as fast as an internal SATA II drive. The specific units recommended by xxjudgementxx above do just that.

The Icy Dock box comes with a "eSATA Adapter Bracket" you do not use. That is for computers that do NOT have a built-in eSATA port. It mounts in a rear slot like a PCI card but has a simple cable that plugs into a standard internal SATA port. On the outside of the case it provides an eSATA connector so you can hook up. Depending on the plain SATA controller in your machine, you may or may not get ALL eSATA features this way. But since you already have a real eSATA port and controller in your machine, use them.

Thanks guys for the very useful information. This is one option that I will keep on the table before deciding. Being new to the tech aspect of computers the plug n play feature of the LaCie d2 Quadra ($154) looks very appealing to me, but you can't beat that 5yr warranty and the Icy Dock looks like a slick little unit.