External HD not recognized, goes straight to kernel panic

When I started having problems with my iMac's internal HD, i started using a Hitachi Touro external HD as my boot device. This worked fine for a few weeks, but then suddenly one day it just wouldn't recognize the Touro. I booted from my Snow Leopard install disc, and although the Touro was listed in the system profiler, I couldn't mount it or access it at all. I couldn't verify permissions or repair disk either because it was not showing up as a connected device. I also cannot erase or format the internal HD because it would just get stuck and hang without completing the operation. I thought maybe it was a problem with the Touro (which connects via USB), so I bought a seagate external HD (which connects via firewire), installed Snow Leopard on it, and tried to boot off of it, but then I would always get the kernel panic screen. At this point, I don't even know where to begin anymore in as far as what problem to handle first. I know that the internal HDs die out fast, but I'm wondering if anyone else has had the problems I have (with regards to booting off an external HD, and getting the kernel panic screen), and how they were best able to remedy it.

Thank you in advance for your help!