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hit the alt jey when starting up and it will list the drives that you can boot up from.

hope this helps!

/asif
 
Also, there used to be a feature called "Home on iPod" in the developer's beta version of Panther. That feature unfortunately never made it into the final release.
It is generally not recommended to use the iPod as a continuous hard drive (heat issues). I have used mine as exactly that though for some time now and never had any problems.
Carbon Copy cloner can copy a complete image of your Macintosh HD onto the iPod, which you can use also for example, if you are often using other workstations.
 
I think you should keep in mind, if you boot from your iPod, any damage sustained to the drive while using it like that will not be covered (probably won't void your warranty, it just won't be covered), as booting from an iPod is not recommended or supported by Apple.
 
You can but you really shouldn't .. if you really want a backup OS just get a cheap FW or USB2.0 enclosure and a 40GB or so HD ..
 
The iPod is not made to sustain long periods of spinning the hard drive. When playing music, all it needs to do is spin up for a bit every once in a while to read files to the buffer. When you're running the operating system on it, the burden on the hard drive is much more intense. Also, IIRC it is not a very fast hard drive. Since all it does is read music files, I would be surprised it it was anything other 4200rpm (used in notebooks). It could even be less. Running an os on it is not worth it. Get a cheap firewire external drive like someone else said.
 
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