Parallels For Mac Connect External Drive

External drive for mac proParallels

Here's my problem, please help me fix this:
I have an 80GB, 1G RAM MacBook. I have used about 2/3 of the hard drive. I want to run Windows XP on my Mac to use just Internet Explorer (to use Trellix in Verizon WebCentral) and Quicken for Windows.
I use Parallels now, but the going is SO SLOW!!!
So today, I bought a Maxtor 120G External (OneTouch) hard drive. I've also bought an additional 1G of Ram (the middle screw is entirely too tight - do they have a special screwdriver for the screws???) that I have yet to install.
My questions are:
1. Can I use the external drive to be the Windows XP Operating System/thereby dedicating my internal drive to OS X?
2. Is the Maxtor 120G OneTouch the right external drive? I haven't a clue!!!!
Another problem, incidentally, is that my Macbook only has 2 USB ports!! I am thinking that I should look around for a portable external hard drive powered by my firewire connection (which I don't use) - is there such a thing - since this Maxtor external drive really needs to use both of the usb ports - or should I just find a great portable usb hub??
Any and all help is warmly welcomed and desperately needed!
Stacy

Connect

Connect External Drive To Laptop

When you connect an external storage device, such as a USB drive, to your Mac, you can access the contents from Mac OS X applications. Using SmartMount, you can set Parallels Desktop to automatically mount storage devices and volumes to Windows. Just connect your external drive via Windows on Parallels Desktop again, and you can access its files using the alias. Hence you can remove write protection of a NTFS formatted drive in Mac OS and copy items from your Mac to the external drive using the above mentioned alternatives. Unable to detect external hard drive in Windows virtual machine. When I check the device in Devices-> External Devices it disappears from My Computer. However, when the device is unchecked it is detected by Windows but I am unable to copy anything on/from drive.

Mac Connection

Parallels Desktop for Mac is a hardware emulation virtualization software. Further, Mac drives can now be mapped by Windows and sound devices can now be changed. Thunderbolt and Firewire storage devices are designated to connect to Windows virtual machine.