I need some advice..

I would run the software firewalls on each computer. I have Onecare installed on my Homenetwork 3 computers. All is working well and I can tweak the kids computers to be a little more stringent then my wive's who needs to do mental health research.

If you feel tranportability will be needed with the external drive, then USB is the way to go. This way you are not limited to a lack of network connectivity down the road.

Check out MS Onecare, you can get it for 20.00 a year if you download the beta now!

Good luck.

No you have it right and running internal firewalls will not hurt anything at all and what will be even better is if they are not the MS provided firewall that comes with SP2.

As far as the removable drive goes one of the USB ones should work out nicely as it allows you mobility and the ability to disconnect when not in use. You'll be able to share this across the network if you want to and at the same time have the ability to move it to different computers if the need ever arises. However don't go for a brand name unit buy a USB2 Caddy and a HDD with a lot of Cache on it to make things faster well at least appear faster and get the biggest drive that you can afford as well as one of those metal caddies so that heat isn't locked up in the enclosure so that the drive runs cooler. If you look at something like a Seagate HDD with 8 MEG of Cache things will work quite well and you'll not have problems with some of the current crop of USB devices that are not being recognised after the latest round of XP Updates. The Caddy will also come with a driver disc that will allow you to use it with older versions of Windows though for this to work you'll need to format it to a FAT32 Partition/s.

If you where to go with a Network Storage Device you really should have it on its own dedicated UPS to protect it from power surges and the like as the power supplies on these things aren't overly robust and there have been a few questions asked about them recently when things have gone wrong.