I have a knack of crashing hard disks, and I really can't help it. Every 10 months, my hard disk crashes, and then my vendor replaces it, thanks to the warranty. It has almost become a routine now.
Recently, my hard disk device controller failed, and I couldn't access my hd anymore. I had seen this coming (yeah 10 months up), and had backed up all important data. But, then I was too busy and couldn't afford the latency time for the hd replacement. So I chose to live a few days without a hard disk.
Here is what you could do, to keep working on your computer:
1. Get your hd replaced. Lucky, if it's under warranty. Bad if it ain't. Plus, the time to get it replaced.
2. Live on a Live CD. It's cool, runs everything but a tad bit slow. It's not persistent, so all settings lost, each time you run.
3. Live on a portable Linux on your USB mem stick. Super cool. Runs on all shapes and sizes. Small. portable. cheap.
4. Live on an OS installed on your external USB hard disk. Awesome. Not as fast as your IDE or SATA Hd, but hey, an entire complete OS..amazing. But a little expensive if you don't already own one.
Now, I chose an USB memory stick for 2 reasons, it's small and it's decently fast. If you visit pendriveLinux.com, you would find some really cool ways to install any Linux distro onto your trusty thumbdrive. Even though I am a regular ubuntu user, I tried their own PendriveLinux2008 which is derived from MCNLive (A Mandriva flavour)
The beauty of this entire distro is persistent loop, that saves all changes back to the usb drive. Simply put, it's a writable live cd. Strangely, I really love the distro. Beryl/Compiz comes preinstalled along with all the usual tools. You could install more apps if space permits. Plug the disk on any PC and you can use the OS and all your favorite applications. I am not writing a post showing you how to do this, as the pendrivelinux site has nice comprehensive instructions.
FYI, I used Ubuntu 7.10 live cd to access the internet, download the OS and install it onto my usb flash drive. An important tip, sometimes you may need Lilo/grub incase your MBR (boot records) of your flash drive are messed up. It's very easy. Boot in with the live cd of any distro. Install the OS onto your flash drive (as mentioned on pendrivelinux). Run these in the terminal.
$ sudo apt-get install lilo
$ lilo -M /dev/sdx
where sdx is your flash drive.. run fdisk -l to discover it.
If you need any instructions, do email me to write one for you. It's really that simple ;)
Here is Pendrive Linux in it's full glory!