I would like to know if I can backup my internal HD on a external HD then restore my computer back to the way is was ship to me, And will I be able to access all the programs that I backup on the external HD

I have not had much luck keeping programs after a re-install. The purpose of an external drive is to back up files when you have to re-install windows. The problem is that the programs are running too slow if your considering re-installing windows, why would you want to keep the programs?

Copy over your video's, music and other documents then re-install windows and other smaller programs you use. Best way to get a good re-install.

If you do a repair installation, your programs won't be affected
Here is a link for some info
Repair Installaion
A Repair Install will replace the system files with the files on the XP CD used for the Repair Install. It will leave your applications and settings intact, but Windows updates will need to be reapplied.
A Repair Install will replace files altered by adware and malware, but will not fix an adware, malware problem.
Perform a Repair Installation (http://www.microsoft.com/windowsxp/using/helpandsupport/learnmore/tips/doug92.mspx)

I would like to know if i can backup my internal HD on a external HD then restore my computer back to the way is was ship to me, And will i be able to access all the programs that i backup on the external HD
I have XP and I backup my PC routinely (using the Microsoft XP backup utility) to an external HD and it works perfectly when I have to do a restore. This backup utility is not loaded with the operating system but is available for installation in the "addvalue" folder (I think) on the OS CD.