I have a SimpleTech pocket-sized 40Gb usb hard drive working, no external power needed.
I have a SimpleTech 120Gb usb hard drive working. It comes with a power cord.
I have an old Quantum and some other brand 40Gb IDE hard drives working with a IDE to USB converter cable. That came with a cord to power the drives. Cost for set: $15
I have a LG DVD/CD R/W drive that works just fine. Need to already have a formatted disk in it or the XO won't mount it. Mounts automatically.
All the above mount automatically.
If I give advice it is usually because I did it / tested it successfully on my XO. I will warn you otherwise.