I am pretty sure that laptop does not support USB 2 which means data transfer from the external drive will be limited by the slower USB standard.  The skipping is likely due to the drive not being able to supply data quick enough to keep up with the pace of the movie being watched.  One solution would be to purchase a USB 2.0 PCMCIA card.  This would allow you to connect and operate the external drive at USB 2 speeds.

The 8200 and all other C-chassis Inspiron and Latitudes are USB 1.1. You do need a USB 2.0 PCMCIA card.

Thanks for the quick response!

Tried to search Dell for an upgrade but only found one match for a laptop. Unfortunately the card looks like it goes where my wireless card is so I guess I'll have to phone for the right part.

The card you are looking for can be purchased at Best Buy, Circuit City, CompUSA, etc. and works very well.  You can purchase this with multiple USB 2.0 ports or a combination of USB 2.0 and firewire ports.  The one that I used on my I8100 was made by Adaptec and worked well.