one question. Is the deviced powered via the USB cable, or does it have a separate power cord, or even a separate adapter?
And what you heard certainly is untrue. I use my external hard disk for backup, and most of the time it's just lieing around in a drawer of my desk at my work. Hard disk don't lose data when disconnected. Neither do USB-sticks, by the way.
What you certainly should know, is that an external hard disk somehow is less reliable than an internal hard disk (in your computers case). It's a bad idea to use any hard disk to store the ONLY copy of any data you don't want to lose and it's a VERY bad idea to do so on an external disk. So whatever data you put on it, be sure to have at least one backup copy elsewhere.
I realize this is not an answer to your primary question about switching on/of and (dis)connecting. If you answer the question I started with, I'm sure somebody will give you a good answer.
Kees
Hi I was wondering what the proper way of using an external hard drive is to avoid anything going wrong with the data. Can it be plugged in, or turned on and off whenever? or does it have to be turned on before the computer starts up. Also, I have heard that if the power source is unplugged, that you can lose all your data, is this true, and if so, how can you protect your data from blackouts?
Thanks!
Mine is USB connected, with an on/off switch.

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic