Hard drive rescue issue...please help

Hi,

I have a 4 yr old Mac book pro (works perfect). However, i now have no hard drive space. I went to the Mac store and was advised to buy an external hard drive to back up my pics (the main culprit, about 40G's) and run iphoto off of the ext HD (as long as i had it plugged it should work

so here is was I was instructed to do
1) plug in external hard drive
2)go into my regular hard drive, then folders
Users/saladiro/pictures/"iphoto" icon,
3) i was told to drag this to my new HD that i bought, but when it floats over, i get the circle with a line through it, meaning I cant drop it.....

can someone please help me get these pics on the ext HD, so my MBP can run again

tks

 

ok....so this is what i see in disk utility....

i can select the ext HD from the left
I have 4 buttons above, Firs Aid, Erase, Partition, RAID, and Restore
The one that seems to make the most sense is Erase, however, the tab that has a drop down to "format" is only showing, MS OS Extended (journaled), MS OS Extended FAT, MS OS Extended case sensitive, etc.....

Should I be seeing the option to format in HFS+?