Help a Newbie

[mel]

In an aside, a rep at Apple told me that if my external drive was formatted using FAT 32, it would corrupt all my files. She suggested I use Mac OS Extended (Journaled). Of course, I can't just erase the drive, because there's stuff on it that's not on my computer hard drive (mostly iMovies I made). So I bought a Maxtor One Touch 4plus 500 GB. Can someone please talk me through the steps to format it for OS Extended (Journaled)? Will I be able to move everything on the first external drive to the second even though my internal hard drive is only 80GB?
Is there any potential pitfalls I haven't foreseen?

Thanks in advance for your advice,

Mel