Good call reasons, sounds more plausible than the wizard.
I don't believe I've ever seen that before. Does your MB have an external SATA connection on it's back panel? If so, I would guess that the external port is on the same controller as the internal port that you have your HDD connected to or maybe even that your MB desiginates one of it's header's as the 'external' port.
XP could also just be confused, heh, who hasn't experienced that before?