Just to throw my 2c in the pot...
The squealing noise is most likely the bearings/ bushes in your HDD cooling unit. Nothing too major to worry about. May as well just remove that unit all together. As far as the HDD question goes - yes, you can easily put a new drive into the same case and copy the files from the old drive. Only thing to remember is to plug ne new one in as "master" and the old one as "slave". Pop the XP disc in and boot to it, then install.
However...
To avoid the most evil situation where you accidentally format your old drive and inadvertently infect your new drive, I'd do it this way:
FIRST - Back-up all of your data and settings to your external drive/ cloud space and then Take your PC off-line!
SECOND -
a. Remove old drive,
b. Attach new drive,
c. Insert XP disc, boot to it and do a fresh install,
d. Install all of your "anti-everything" software,
e. Jump online and update all "anti-everything",
f. Update Winders,
g. Restore your data and settings from your external backup,
h. Power off, unplug, earth yourself and plug the old drive into the "slave" slot
i. Scan your old drive with your "anti-everything" software,
j. Check that everything is restored correctly on your new drive against your old drive,
k. Once you're satisfied that everything is as it should be, check again.
l. Now you can format the old one.
m. When all is done, do a brand new back up of your new, clean(ish) system
The reason I urge to do the bulk of this off-line is illustrated in the graph below... (current survival time for an unpatched Winders install online - 42 minutes - less than the time it takes to install, update and patch an XP install...nasty!)
(source: SANS Internet Storm Center, "Survival Time" http://isc.sans.org/survivaltime.html)