|Apparently the Gigabyte GA-965P-DS3 mboard has 6 SATA 3Gb/s connectors, so it already supports recognizing drives having SATA II specs, and if the mboard's bios already supports recognizing a 250gb manufacturer's size drive as it's full size it will have no problem recognizing the size of any drive larger than that.|
You can install SATA drives having SATA II specs (3gbits/sec = 300mbytes/sec max burst data transfer rate; SATA drives transfer data at 10 bits per byte, not 8 ), or there are a few drive models that support SATA 3 specs that you could use and have them running at SATA II specs max.
Note that some SATA II drives come with a jumper already installed on two pins that limits them to the original SATA specs - (1.5gbits/sec = 150mbytes/sec max burst data transfer rate)
-you must remove the jumper in order for the drive to be able to achieve it's max SATA II specs. E.g. three Seagate 500mb SATA II 3.5" drives I have bought were jumpered that way initially.
Whether is smarter for you to use two drives rather than one depends on how important your personal data is to you. It is better to not "put all your eggs in one basket" - you should have data you don't want to lose on partitions on two separate physical hard drives.
Whatever you do, if there is going to be only one hard drive that has an operating system installed on it, or in your case possibly two operating systems that each have one partition with a Windows installation installed on it on each of two physical hard drives, it is a good idea to NOT use the entire physical drive's space for the partition Windows is installed on.
You DO NOT have to install everything that did not come with Windows on the same partition Windows was installed on, if you have one or more other partitions the software can be installed on.
The larger the Windows partition is, the longer it will take certain programs that scan the entire partition Windows has been installed on to finish - e.g. Defrag, Full anti-malware scans, CHKDSK /R, etc.
"I would also like to use a drive of this size as an external backup, USB connected."
I recommend you pay a bit more and get one with an external enclosure that supports both USB and eSATA connections - the latter type of connection has a much faster max burst data transfer rate, when you can connect the external drive to an eSATA port.
E.g.if you buy the hard drive separately from the external enclosure, it's fairly easy to find external enclosures that support both types of connections, and some even come with a bracket and wiring so you can have an eSATA port in a slot space on a desktop computer that connects to a SATA header internally for when you mboard has no built in eSATA port.
"I have a dual boot system using windows XP and Windows 7."
Are you using the built in multi-boot feature of Windows 7 to boot either of the operating systems with ?
This applies to Vista and probably the same thing applies to Windows 7 ....
If yes, were you aware of the fact that when XP is booted in that situation, by default it deletes ALL of the System Restore restore points in Windows 7, EVERY TIME XP is booted, unless you use the BitLocker feature that's built into the Windows 7 Ultimate or Business versions ??
I got around that for dual booting XP MCE 2005 and Vista Premium by buying and using the BootIt! NG third party multi-boot program. They have instructions on their web site for how to HIDE Vista or Windows 7's partition Windows was installed on while booting XP to avoid that problem.