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Connecting the recording world together...

I have a fire wire 16 channel mixing/recording board and all was working well with Cakewalk Home Studio 2004 except I cannot get home studio to record to my external drive and it appears it will not allow me to save to a new folder when doing different songs it wants to put all wav files on the C drive. I have a 1.8 GHz 512 MB computer with external 7200 rpm 16 MB cache. I didn't want to go this route due to the amount of time computers take but couldn't afford a standalone that could record 16 simultaneous channels. This is just a hobby so I cannot afford to upgrade my computer at this time but with all I have it has turned into a expensive hobby. Should I upgrade to Home Studio 7 XL (cheapest route I can see) or would it be worth it to look at another package. My budget is tight but I would at least like to record all 16 channels at once. I was recording a friends band as a favor to do a demo and the track storage problem put egg on my face which sucked. I look forward to any help or guidance from those that know best!