Hi to all...

I have 160 gb portable hard disk , can I install operating system xp/sp2 in that? Because I don't want to mess up my laptop xps m1330 which is working on vista.

Looking for response plzzz:)

Nope.
XP Must be installed on a FIXED internal disc, it will NOT boot from a USB device.

There are various flavors of Linux that will though.