Computer doesn't recognize my External HD.

Hi, I have Toshiba satellite M70. The original HD that came with the laptop is Toshiba MK 1032GSX with 100 GB storage. I bought a new HD Toshiba MQ01ABD050 with 500GB storage. I also upgraded my RAMs.
1- I installed my new HD in my laptop and installed windows XP SP3. I want to use my old HD as an external HD.
2- I plugged it into the computer via USB cable, but the computer wouldn't recognize the external HD.
3- I plugged the old HD back into the computer and formatted it, and installed a fresh Win XP SP3.
4- I put my new HD back into the laptop and tried to plug the old HD as external HD to see if it would work now, but the computer still doesn't recognize it.
5- I opened Computer Management and looked under Disk Management, but the external HD didn't show up there.
6- I plugged it into different USP and waited for a minute and a new icon for the external HD in my computer pops up. I double clicked it and gives an error "Please insert a disk in drive E".
Then the icon disappears. I unplugged the HD and plugged it back in but the icon would show up again. I waited for an hour before I plug it back on. The icon appeared for 2 seconds and then disappeared again.
I know it's not a hardware problem for the following reasons:
1- When I plug in the external HD, the light in the HD case turns on (Red).
2- I can hear and feel that the HD is running.
3- I plugged the HD back into the laptop as internal HD to check if it works, and Win XP shows up so there is nothing wrong with the HD.
Can someone please Help me how can I use the old HD as external HD and make the icon for it shows up in my computer?
 
Yeah a lot of the older HDD don't work so well with the newer USB / IDE/PATA/SATA adapter kits. I am using one here with 3.5 HDD Seagate and WD to see which ones are working and not. You can hear them spin-up but that doesn't mean they're 100% okay. In your case you should try a desktop instead of the laptop USB ports might be getting duff. Like I said try a different PC see if they can be seen. External USB just get WD Passport and then transfer any data over to it from the old one. That 100GB I am sure the life on it started to go. MTB on these HDD in the past didn't live up to as promise.
 
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