The short answer is, yes, it will find your drives. In addition to which, generally speaking, you can install a newer operating system over an older one relatively easily, as the Windows (or in your case Vista) installation disk will detect that there is an operating system already on there and ask you if you want to replace it, so you wouldn't actually need to wipe XP, the Vista installation process would do it for you. Doing something like this is only difficult if you wanted to put an older OS on over a newer one, such as trying to install Win98 over XP or whatever, as it will often say something like the DOS equivalent of 'WTF are you doing?! are you mad?!', and not let you.:rotfl:
Any operating system will usually make itself self booting, which as you probably know, in DOS this is not the case, you have to do it manually when formatting a drive in DOS by adding the suffix '/S', but when you install an OS, this is part of the set up, so it should be a simple case of popping the Vista disk in and hitting autoplay on it, sitting back with a coffee and waiting for it to complete the process. BUT, and it is a big but, it's prudent to have a back up of anything vital on a drive you choose to do this with, just to be on the safe side, I doubt it would screw up, but personally, and knowing computers, I wouldn't bet my vital data on it.
So, providing there is room, sticking Vista on should just wipe XP, swap it for Vista, and all the tags for external and internal drives will be detected. Personally, I would make it dual boot myself though, with Vista instaled on a new HD partition, so you could boot in XP
and Vista, as there are still quite a few useful programs Vista doesn't like, and Vista is not compatible with many online services yet either, so even though it is funky and new, it does lack some of XP's flexibility.
Chock