Installing XP from Removable HDD?

[bikinpunk]

I was reading the Tutorial on PC building and got to the part about installing from your HDD as opposed to booting from disc. (http://www.pcmech.com/byopc/step/22/ ). I have an 80 gig external harddrive connected through USB. I would like to try booting from this if at all possible, allowing me to keep the backup there as well. My concern is that I have my internal HDD that is going to be reused in a *new* setup (new CPU, mobo, graphics card, RAM, everything else is reused). I don't want to have to format my internal hdd, so that's why I chose the external drive. Would it be best to save the disc onto the external as some sort of .iso or .bin file as opposed to copying each folder of the disc onto this drive- would this option work? Also, I know you can setup the bios to boot from a cd/dvd drive, so is it possible to set it up to where the bios "looks" into the directory I've chosen, or does it scan the whole drive? I'm not sure how to go this route, but I think I like this option more. Any information would be greatly appreciated. I fear this portion the most since I'm concerned about losing data on my internal hdd.

[jayb1234]

You can not run windows from an external hard drive, only from an internally installed one.

If the version of windows on the old drive is a manufacturers factory load, you need to get a new copy of windows.

Then just do a repair install and use the license key from the new copy.

A repair install should leave your files intact.

If you are worried about files getting lost, just back them up to disks or another machine.