This laptop is the same as your I think and it has a 60GB drive so you should be able to upgrade click here
To transfer all your data, why not do a backup of your drive to the external drive and when you have your new drive fitted `repair` it.
You could also use Acronis True Image to make a mirror of your existing drive or to backup. Or after fitting the new drive install Windows (presumably XP) and then install your backup files over it.
If you use Acronis, don`t forget to make your Emergency Disk to be able to boot. If you use the Windows backup you will need to make the ASR disks and will need a floppy drive.
Hope this helps.