This scenario both will and will not work. Ultimately, it seems impractical and it’s not going to help your fundamental issue, which sounds like a hardware problem. I’ll talk about that first.
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Let’s say you put a clean install of Windows 7 on that machine and update it. If it starts to misbehave like you’ve described right away, I can’t think of a software or organizational solution for you. The machine is fundamentally unstable. It could be a disk issue, RAM, or just about anything.
Unfortunately, that’s impossible for me to diagnose from here. Somebody is going to have to lay their hands on your machine (as I sometimes say) and investigate what may or may not be going on there.
Now, let’s talk about your proposed solution. You can certainly move your data to another disk, but there are a few things that might not work like you expect.
I’m not a fan of flash memory-based drives like USB RAM sticks for ongoing data storage and use. USB/flash memory wears out the more you write to it, so you run the risk of one day having a USB/RAM stick that suddenly doesn’t work anymore.
Hopefully, you’ve backed up all your data (because you’re a good Ask Leo! reader who follows my advice), but it’s still an inconvenience to have that USB/RAM stick suddenly not work. I prefer to have actual external hard drives for that kind of a thing.
The other thing that will happen is a USB connection is going to feel slower.
The internal drive connects faster to your motherboard and enables a much higher data transfer rate. It’s going to feel a little pokier if you put your data out on any kind of an external device, whether it’s flash or a hard drive.
Newer USB 3 connections might not suffer as badly, but it’s something to watch for and be aware of.
Unfortunately you can’t move programs that require a set up to install.
Most programs have an installation process that places information in the Windows registry and common areas within the file system. When you remove Windows itself, you’re also removing all that information that was set up by those installation programs originally.
What that means is that after reinstalling Windows you would have to reinstall any program that installs with a setup process. In fact, you would have to run the installation from its original media and not a drive. That pretty much negates the benefit that you’re going after here.
So, I just don’t see the approach that you’ve described as being particularly helpful. I would encourage you to back up regularly, so that you can revert to a prior backup as needed and see if you can fix the hardware issue.