Will an external hard drive help in password/file security?

How will an external hard drive help protect my files and passwords? Is it possible for the computer to operate with just using an external hard drive? I have recently been getting the "Cain%26Abel" when I run my spyware scan, and I found out that it's a password hacking tool. I don't know how I have gotten it (all my AS %26 AV are up-to-date), but my last resort would be to reformat my computer. If I will do that, I want to make sure that next time around, I will not be infected with the same password hacking tool. I couldn't do back transactions because of this fear that someone out there is just waiting to steal my passwords. Someone has advised me to use an external hard drive. Now, how will that work? I will just plug it in when I will do bank transactions, then unplug it when I'm done? How about the internal hard drive? Won't that also store some data? I am very confused right now, pls. help me. Thanks a lot!

Will an external hard drive help in password/file security?aurora

Backing up your data will prevent data loss, but it will not ensure data security.

Was Cain%26Abel removed or is it still active? If it is still active, you need to take it to a PC expert (reputable and CERTIFIED) so they can remove the infection.

If someone is specifically targeting your system, you need additional protection. Put a windows password on and do not let anyone use your computer without explicit permission. DON'T leave it on and un-password protected when you leave the room.