iTunes config & Backup software for Mac

The best way to use an external drive for iTunes is to make an alias of the external drive, rename the alias to "iTunes", and drag it into your Music folder. You don't need to change any setting in iTunes.

I wouldn't use Time Machine to backup iTunes library. Time Machine wants to keep everything. As you reorganize tracks in iTunes, iTunes will rename tracks and move tracks from folder to folder and that will cause multiple copies of the same track being backed up by Time Machine.

Also, if your drive crashed, you need to get a new one and restore all the music tracks from Time Machine. That can take a whole day for 230G.

I use a small program called SilverKeeper. It is a free download from LaCie. It simply copies files from one drive to another and keeps them in sync. That means after I run it, I will have two drives with identical contents. If my iTunes drive crashed, I simply make an alias of the backup drive, call it "iTunes", drag it into my Music folder to replace the old one and instantly, I will have all my music back without any restore.

Macbook doesn't have firewire 800, only firewire 400.

Why do you want to stick to firewire? USB-2 is just as fast (actually faster on paper), more reliable, and cheaper.

If you want a quiet drive, try a Seagate.

Herman,
I personally prefer not to add a second drive because it will split the track location references in the library and you will have to backup to two drives which is inconvenient. I would rather buy a pair of bigger drives and copy everything on to a single drive. HDs are really cheap. You can get a 750G Seagate for about $250. Unless you are doing everything in 24/96 uncompressed, it is going to last a long time.