First the hard drive -
Open the case and check that the plugs going into the back of the hard drive are securely in place.(make sure the computer is switched off).
If you have a an XP CD,boot to that and run 'Chkdsk' from the Recovery Console.
If you cannot do that,remove the hard drive from your computer and attach it another computer via USB (or internally) and run Chkdsk from the other computer.
Copy off any important files (mp3s,email,videos) that you want to keep.
Chkdsk can also be run from within your own XP system (assuming you get it to start first)
As for running XP from a USB hard drive - that is possible,but not too relevant to your situation at the moment.Concentrate on the above instructions.
How to boot from a CD - http://pcsupport.about.com/od/tipstricks/ht/bootcddvd.htm
How to use the Recovery Console - http://pcsupport.about.com/od/fixtheproblem/ss/rconsole.htm
How to run Chkdsk - http://vlaurie.com/computers2/Articles/chkdsk.htm
Gadget for running hard drive via USB (other brands are available) -
http://cgi.ebay.co.uk/USB-2-0-SATA-IDE-3-5-2-5-Hard-Drive-Adapter-Cable-/300518206623?pt=LH_DefaultDomain_0&hash=item45f847ec9f