A simple fact...Hard drives die eventually. External or internal, it doesn't matter. Although external hard drives have a genuine purpose because they might work as a backup location for files or as a secondary storage device, I don't depend on them for "permanent" backup purposes. Everyone will have a different way of making backups, depending on their computer use and configurations, but for me, smaller, permanent backups, such as CD's or DVD's work better.
Most newer computers come with Recovery CD's which will restore the computer back to factory condition. If there isn't Recovery CD, then normally a Windows CD, Driver CD's, and all program CD's are provided. That only leaves keep backups of personal documents, pictures, music, etc. I back all of that up to a removable "permanent" media such as a CD or DVD. Nothing major to purchase and I don't need to play with a secondary hard drive...
That said, if you like to transport your data to different locations then an "external" hard drive is the way to go. But remember, EVEN IF you have the external hard drive installed, it's still a good idea to make hard copies to a CD.
Hope this helps.
If I was to buy an external hard drive, then I suppose I would get adequate installation instructions, but meanwhile ...
Though our computer is currently running very "deep and crisp and even", we had a couple of disasters in the past, i.e. losing everything.
I have noted that recovery programs, such as the one offered by McAfee, require some place else to operate in - currently we run XP SP2 on HDD (C)
Thus my inclination is to go ahead and get an external hard drive, but I would like to have the opinions of more experienced ppl than I am.