USB 2.0 External Hard Drive not recognised

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Can anyone shed some light. I have a 40 Gb external USB hard drive attached to my PC. Which was being used exclusively as storage and my PC recognised it no problem. Today I actually installed it into my PC (internal), reformatted it and loaded Windows XP home onto it. As I wanted to save my existing hard disk just in case and install a clean O/S to swap over eventually. I have since taken this disk back out and connected it via USB again and it is not being recognised at all by Win XP. Is it therefore true that if there is an O/S loaded on an external USB hard drive that it cannot be recognised let alone booted to. Any advice is much appreciated....
 
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