You can transfer the data, but not the operating system...
You will have to buy that...
All the best Brett
Was the data backed up to the external drive using the backup utility in XP?
Clickfree Automatic Back-up HDDs were semi-popular last year around this time and slowly died off. Their catch phrase was the ability to auto backup like the OP mentioned.
There are tutorial videos on Clickfree's website, found HERE
, that you can use to become familiar with the process itself. If you used the Clickfree application for the backups (which it sounds like you did) there should be a restore option and you will simply need to install the Clickfree software on the Windows 7 computer.