You are correct, in that the video programs take a lot of the 250 memory. USB is one way to connect, with Firewire 400 or 800 a much faster method.
I had to train the PC ( and our MacP ) to trigger the external hard drive from searching each and every time when using the Beomedia. This is somewhat like the Beoport automatically performing a scan function on N.Music, rather than a click to the appropriate drive.
You can take stored programs and convert and burn them to DVD. I am not real happy with the final quality, but it can be done.