Update.

Initial scanning took about 30 minutes, which is about the same as slimserver or myth on my main server, which is good.

Everything is playing great now from the external HD. Mounting the drive does not appear at this time to create a significant amount of activity.

I have also installed a system monitor applet which has the ability to launch scripts, and save them in a menu which is available by tapping on the monitor. This means I can mount and dismount the hard drive by tapping a menu item.

Now the concept works, the next step is to mount the kit in the Car. For this I'l need a usb extension lead, a longer audio lead for the fm transmitter, and a car charger for the 770. Oh and a mount for the unit.

Many many thanks go to thoughtfix, I gleaned most of the information I need ed from his blog.