I have many external hard drives and I have encountered a problem. When I turn on a drive, vista home prem. recognizes the drive, BUT tells me it needs to be reformatted. I have over 200 gb of data on there and know it does not need reformatting. I have an Archos 704wi-fi that tells me that same message sometimes, but through persistence I eventually get it to work. I am starting to get nervous.
I've never been a big fan of external drives mainly for this reason. It sounds as if you better run a check disk on the external drive, and think very hard about replacing it to a Seagate or western digital drive. Sounds like the drive is going bad.