Most likely if you plug the drive in, the OS will recognize it and it will show up under my computer (USB thumbdrive). I'm actually not really sure if there is a security settings to disable installing USB drives. It's going use 2000/XP's native driver so it can't be setup to not let you install a driver (I just looked through XP Home's MMC and can't find anything).

I just used the stock Intel heatsink and thermal pad. I haven't had any troubles with the processor temp (never seen it above 43-45C, even under heavy use, idles around 34).