Installing Ubuntu Linux on external hard disk..linux experts PLZ HELP

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I am a newbie to Linux.Ive recently got a 80 gb external hard disk (USB powered).I have a a 256 MB ram PC, with Pentuim 3 processor. I want to dedicate the external hard disk completely to linux and start using it for development. The external hardisk is in NTFS format with 2 partitions of 40 GB in it. (I assume i need to reformat it to ext3 filesytem... right?) I guess on of them is sufficient for Ubuntu Linux. So guys any idea how should I go about?Linux experts please help. I would be happy to give u any other information needed.