wol-va-rine
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You'll need to ghost the info onto the external. However, it still won't work. The windows install will not know what to do since there is now a controller (probably USB or eSATA) between the hard drive and the motherboard where before there was just a strait connection. Even if you ghost, the system will not boot. It will just Blue-Screen and restart.
And my two cents, don't run XP (or any OS for that fact) off of an external, it will be extremely slow.
some motherboards have the boot option to boot off of a usb connection, don't they...? I haven't really researched it, but my motherboard has that option, either way, (@OP) if the guy at Best Buy told you that, not only is he wrong, he's way underqualified for his job...
I would just still use your old hdd, delete the files you don't want seen and then use hdscrub to make sure the files can't be recovered...