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Small SSD and large HDD to compensate for lack of space?

If I can, I want to use an SSD to boost OS, gaming, and general-use performance in my new system. The problem is that I can't really afford the large-capacity drives and I fiddle around with lots of data - music, movies, games, documents, you name it. If I get a generic 1 TB HDD (with good specs), will transferring files between the two drives benefit from the superior technology of an SSD? So what I'm asking is: will copying files to and from the HDD be blazing fast, like copying files from one directory in an SSD to another?

Also, two questions that have been bugging me:

1) a lot of my games are Steam edition. Meaning, they're cloud based. I don't know much about cloud computing and gaming, but as far as I'm aware, I don't think I can install Steam in an SSD and the games that I purchase from Steam in a separate directory outside of Steam's like in a separate HDD, can I? Can someone please clarify this?

2) Can I run applications and programs from drives that are not my main? For example, playing music or video files or editing a script / program that are stored in an HDD (internal or external) when the OS is installed in an internal SSD?
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  1. Best answer
    No, you would get no benefit of having the fast ssd while copying files to an external drive, assuming it's just hooked up via usb.

    The ssd will get you a very responsive os, quick application loads, and faster startup. The mechanical drive will be limited by the external connection to the machine, unless you go with esata. If you used esata you would still be limited by the mechanical drives speeds in coping files to and from it.
  2. thanks for the reply but now I have a few more questions that need answering. I was going to make a new post but since the questions are closely related, I decided to edit my original post instead.
  3. Best answer selected by rladngus.
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