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How to set up external hard drive and FCE 4

I am going to buy an external hard drive (firewire 400) and FCE4 but I am not sure how to set everything up.
Where should I load the software, capture to, and save projects?
FCE should always live on your system drive. Use the external as your Scratch Disk. You will select this in System Settings in FCE. I create a folder on the external for my projects and point FCE to it.
Keep your project files on your system drive as well as your autsave vault if you use that. You can put your other files, such as wavefrom caches on the external, though I leave them on my system drive.
Do not partition the drive. Format as OS Extended
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