100% of my music is stored on a 1TB Fantom Drive external. My 300+ gig music collection (much of which is FLAC, about 20 megs a song) plays seamlessly, even on shuffle mode. It's usb 2.0. I've also got this computer hooked into my tv, and i regularly stream 12 gig mkv files directly from the HD to my television, and it rarely skips a beat.
Why do you want a portable hard drive? If the disk is for your backup, you don't want to move it around, as you'll likely damage the drive in transit.