Hi
I am sorry you feel that way. I am not a Microsoft Employee but have used the Files and Settings Transfer Wizard many times for clients.
Firstly it is not obvious that you are going to remove the external and put it on the other PC permanently. I have clients who have 2 PCs and have used the Files and Settings Transfer Wizard to copy files and settings from one PC to the other so that both PCs "look and feel" the same. The external drive they had stayed on the original PC and was not transfered to the other. Although it was used for the purposes of transferring the data/settings.
Secondly the Files and Settings Transfer Wizard is customizable, you can select what to backup and which drives to leave out.
And lastly - it is just a simple program that searches your WHOLE PC for data and settings you might want to transfer. It does not "know" or "assume to know" what you want transferred. That is why it is up to the user to customize the settings giving the user options.
Here is some more info on the Files and Settings Transfer Wizard:
http://www.aumha.org/win5/a/fast.php
http://www.microsoft.com/windowsxp/using/setup/winxp/migrate.mspx