I'll (hopefully) simplify this:
If you want stuff from the disk you have two options:
- clone the bad disk, then attempt recovery on the clone (best option)
- run iRecover on the bad disk, attempt to copy files from it (not so good option, might kill disk altogether)
For cloning you'll need a target disk of at least the same size as the occupied space on the source (the bad) disk. Preferably a target disk that is the same size or larger than the source disk. You'll need DiskPatch to clone the disk. For cloning it's best to connect a bad disk directly, not through USB, but you can try and see how far you get. After the clone you'll have to work with the result disk to see if files can be recovered. It's possible that certain areas of the bad disk didn't copy to the target disk because of read errors, so be prepared for not being able to access the disk normally; in which case you'll need iRecover to copy files from the target disk.
I need to purchase DiskPatch and iRecover?
Yes, but start with just DiskPatch for the clone, if you decide to go that way. Remember, we have a refund policy so if things don't go well we can work something out. If the clone goes well you may not need iRecover.
Will I be able to boot DiskPatch from a USB stick while my 'bad' hard drive is connected via USB also?
Yes, but it is best to connect the bad disk directly and not through USB. Same goes for the target disk.
Is the data cloned back to the 'bad' drive?
No. The bad disk is essentially worthless after the cloning has been completed. After copying files to safety from the cloned disk, the bad disk should be discarded; it's obviously not reliable anymore.
I have another external hard drive to back the data up to which is also has a USB connection.
That can be used but only if it is at least the same size as the bad disk. Remember, cloning means copying the entire disk sector by sector. It's not like creating a backup or copying files. So everything on the target disk is wiped and overwritten with stuff from the source disk.
Finally, that Dell may not be the best choice for the recovery operation. If it currently contains a 40gb disk it's likely to be an old machine, which means it won't be able to handle the large disks.
About the cloning, you should read the DiskPatch manual part that describes cloning before you get going. The walkthrough I gave earlier can help too, but you really need to understand what it is you're doing. If the data is important you have to do it right.