Well you would, but you would keep the essential data backed up, also its easy to copy a partition but it wastes alot of space its easier just to keep a disk with all your drivers and apps on it and reinstall windows if something fails, a reinstall of windows every now and again is a good thing keeping a back up of the installation is fine but you carry the baggage all the little niglling errors that build up over time.
Drives dont fail to often, and if you keep an external drive you dont need another one dedicated to the system by your logic, as i see it anyway. Seems a little overkill to save you the hour or two it takes to replace an OS its also not as easy as it looks in some cases to copy images of HDD back over most of the time its just as quick to reinstall the OS.
XP pro does also let you boot from an external usb device its not an OS thing its a motherboard thing wether it allows you to do that, you can also boot up with the XP disk or you can boot a linux live disk and repair via that method, lots of ways to do it, just seems you are making more trouble for yourself, keep it simple and there is less to go wrong.
If i were you the way i would set it up is to take a 500gig drive of whatever model and speed you select, and put on it a a 40Gb system partition(plenty room for OS and installed programs) and then leave the rest as one big data partition or maybe split it in two if you want, and then you still have your old drive whihc is a decent size so if you want you can keep an image of the system parition on that and the rest is just spare storage. That way you have a back up and it can be booted from if needs be as well.
The extra 40gig drive for the system partition is really superflous if you need that much storage just get a 200 or 250gig drive for the system seperate(that size is the cheapest price per GB not much between 80 and 200 pricewise) its actually difficult to get drives as small as 40Gb these days unless it is one of the raptors and those are overpriced and dont actually do much and are even beeten by cheaper slower drives in performace these days.
My advice just keep it simple dont overcomplicated it, as its just another thing to go wrong, you know what they say about the best layed plans.