How is the external hard drive going to be connected? You could create a
bootable Linux live disk and boot from that in the CD drive. It is a
usable OS, Ubuntu has some nice features and is a complete OS on CD,
then you can have your home directory on a USB or even several different
/home directories. Now it is somewhat slow but usable. You did say the
BIOS was old to support booting from USB so that lets out even large
external hard drives. What other means of adding an external is there?