1. Firewire External Hard drives are expensive. Is there any big difference between USB & Firewire?
There isn't a big difference; Firewire is somewhat faster than USB 2.0. USB 1.1 is the old standard. Firewire/USB 2.0 combo enclosures are more expensive than single standard enclosures. I would choose a Firewire over a USB 2.0. One advantage with Firewire drives is that they can be used in Firewire Disk Mode; there may be other advantages that I am unaware of... If I'm not mistaken USB 2.0 is the Windows standard, so a combo drive may be the oen for you if you think you will ever want to use the enclosure with a Windows box.
2. I want to buy a 160gb hard drive & a Hard drive enclosure. Should I go for it or it will be better to buy a External hard drive?
Buying a bare drive on sale and a separate enclosure will always be less expensive than purchasing an assembled external drive. At least I have never seen a better deal...
3. Can I install App in the External Hard drive to save space?
You can install applications anywhere you want and run them.
4. Can I reformat that hard drive in windows and use it with my Mac? I want to use this hard drive winth Windows & Mac.
Beats the heck out of me! Maybe you can partition a drive and do what you want but someone else will have to tackle this question. I doubt that you can run both Windows and Mac from the same drive unless there is a way to create separate partitions.
5. Which External hard Drive do you like? ( Under $150 )
I look for drives on sale at places like Circuit City. These deals usually require sending in rebate forms. A couple of months ago I purchased a Western Digital 250GB drive at CC for $80 after $100 in rebates; the first $40 rebate check arrived a couple of days ago. (It was an unadvertised in-store special I happened to hear about...) Costco has the best prices I have seen without rebates; last time I looked the same drive I bought for $80 was $129 at Costco. Most drives have a one year warranty; Western Digital often offers an extension to three years for an additional $15 or so. At least some of the Seagate drives offer multiple year warranties; they also tend to be more expensive than WD or Maxtor drives. CC features drives on sale of various sizes in their Sunday newspaper ad. I prefer drives that are a step-up from the basic drives. A basic drive can usually be identified by its 2MB buffer; better drives will have an 8MB buffer. The drives in those fancy aluminum LaCie enclosures are basic, 2MB buffer drives. Most drives will be 7200RPM ,which is plenty fast.
At the Circuit City web site there is currently a 250GB WD for $110 ($70 rebate) and a WD 160GB for $120 (no rebate.)
I think that you can get a 160GB drive and an enclosure for $150 or less without much trouble. If you are willing to wait a few weeks for a deal and get a basic enclosure you could wind up with a larger drive for less than $150.
Enclosures:
http://www.tigerdirect.com
http://www.cooldrives.com/firen.html
http://www.xpcgear.com/enclosures.html
Good Luck!