New External HD

OK, I bought a external western digital HD (1 TB) and I am doing a complete back-up at the moment using the western digital software. Couple of questions though. Is time machine better to use than the western digital software to back-up and in general use? Is there a way where I can move all my current files (movies, music, pictures, documents, etc) to my external hard drive and still have complete access to them at all times (using itunes, etc) even though they are not on my mac hard drive? If so, how do you do that? I tried the search and couldn't really find an answer.
Thank you.

Short answer: Yes, Time Machine is better to use. You might also consider using software that will create a bootable clone of your OS X to the external hard drive. Both "SuperDuper" (shareware) and "Carbon Copy Cloner" (donation ware) are well suited for the job. And you'll have access to all your files and programs from the external.

Regards.

Whereas my outlook is that Time Machine is great if you need to go back to that Older version of a file that you replaced, conversely if u need to be able to continue working in the event of eg Hardware Failure, then booting off an Ext HD with Firewire 800 means that SuperDuper or Carbon Copy cloner is THE answer, everything is as current as your latest incremental backup. Time Machine will allow a reconstruction of your HD it is just requires more steps.