If another computer shows the same problems, it seems the drive has indeed been damaged. (BTW Win2000, or Windows 2000, is the previous Windows version).

If you feel competent enough, you could try to open the drive case, extract the hard drive which is inside, and try it in some computer, in case it's just the IDE to USB electronics which is broken.

About buying -
What I would do, is buy a high grade HD (the same kind you would put in your computer), and an empty USB case. That way you can make really cheap high-grade external HDs. A good method to recycle old HDs too, and in this case your external drive only costs the price of the USB casing, about $20-50...

If you buy ready-made products, like that WD 80GB Dual Option External HD, there is an old trick to get a quick user survey; In Google, type in the name of the product + "problem", and you'll get a quick list of what problems people might have had using this item, all over Internet... ;-)