Further to creating a persistent home directory, this will only work if the hard drive is formatted as FAT, not NTFS, which is the standard for WIN NT/2000/XP.

If the hard drive is NTFS, you can create a FAT partition; all warnings/cautions/'proceed at your own risk' applies. You should back up everything you can't leave without, and consider the possibility of a full reinstall/restore if something screws up.