We were looking at just formatting our extra 160GB HDD as a FAT32 and grabbing it an enclosure as our external for the time being.
I'm not sure if FAT32 would work. Apple uses a journaled HFS+, or something lika that. Check here:
http://www.ifixit.com/Guide/Repair/...nibody-Mid-2010-Hard-Drive-Replacement/3030/1
It's very easy to upgrade.