I have recently purchased an iomega 500gb external USB HD. How can I use it to run my desk top on start up?

I'm running windows XP, my computer is 256 80gb, which is almost full! I have sent some of my programs to my external HD but when trying to access them my PC has had trouble finding them and appon sending them back to C drive they are no longer the full program. What am I doing wrong? How can I configure my PC to fully run off the USB drive on startup? I,m planning on putting a 1GB memory in it very soon but still want it to run off the USB drive if possible. I've only had my PC for 18mths and am still learning so I need as much info in this matter as possible or even a website addy I can go to that will explain it. Please help! Thanking you in advance.