Questions about external hard drives..

I bought a bunch of stuff to rebuild my computer, and after getting it all installed for some reason or another my hard drive stopped working, talk about a pain lol. Anyway, what I'm trying to figure out is how to get Windows XP to run off of an external hard drive. I talked to the tech support at ASUS, the company that manufactured my motherboard and I was told that I could run Windows XP off of an external hard drive that I have. I have an 80GB IoMagic external hard drive. I tried to get it to work last night and this is what was happening.

I started the computer with XP in the drive, and I was able to reformat the hard drive to NTFS, and as it starts to load, it gets to the screen that says Windows XP and has the loading bar thing on it, and then it just blue screens before it gets through that loading screen. Do I have to change something in the BIOS in order to get it to load correctly? I have already changed the boot priority to boot from the hard disk, becuase it kept trying to load from the floppy drive.

Any help to figure out how to get this to load off my external hard drive would be much appreciated. I have ordered a new hard drive, but it won't be here for about 3-4 more days, so I'm trying to use this in the mean time. Thanks a lot.