Crashing and poor performance during playback of a large project.

Hi,
I've been a regular user of iMovie for about 3 years and have edited several 50GB+ projects of DV quality footage without too many major issues with lag or 'dropped frames'. I currently have a 80GB project that resides on a 95% full 320GB Firewire 400 external drive that has been getting very slow to open and near impossible to work with.
Pair the bursting-at-the-seams external drive, with an overburdened 90% full internal drive - the poor performance wasn't to be unexpected. So I bought a 1TB Firewire 400 drive to free up some space on my Mac. My large iTunes library (150GB) was the main culprit and it was quickly moved onto the new drive.
The iMovie project was then moved onto my Mac's movie folder - I figured that the project needs some "room" to work (not that I really understand how Macs use memory) and that having roughly 80GB free with 1.5GB RAM (which is more than used to have) would make everything just that much smoother.
Wrong.
The project opened in roughly the same amount of time - but when I tried to play back the timeline, it plays like rubbish and then after 10-15 secs the Mac goes into 'sleep' mode. The screen goes off, the fans dies down and the 'heartbeat' light goes on. A click of the mouse 'wakes' the Mac only to find that if i try again, I get the same result.
I've probably got so many variables going on here that it's probably hard to suggest what the problem might be but all I could think of was repairing permissions (which I did and none needed it).
Stuck on this. Anyone have any advice?

I understand completely, having worked with a 100 GB project once. I found that getting a movie bloated up to that size was just more difficult with jerky playback.
I do have a couple of suggestions for you.
You may need more than that 80GB free space for this movie. Is there any reason you cannot move it to the 1TB drive? If you have only your iTunes on it, you should have about 800 GB free.
If you still need to have the project on your computer's drive, set your computer to never sleep.
How close to finishing editing are you with this movie? If you are nearly done except for adding audio clips, you can export (share) it as QuickTime Full Quality movie. The resultant quicktime version of your iMovie will be smaller because it will contain only the clips actually used in the movie, not all the saved whole clips that iMovie keeps as its nondestructive editing feature. The quicktime movie will be one continuous clip, incorporating all your edits and added audio. It CAN be further edited, but you cannot change text of titles already there, or change transitions or remove already added audios.
I actually do this with nearly every iMovie. I create my movies by first importing videos, then adding still photos, then editing with titles, effects and transitions. I add audio last, and if it becomes too distorted in playback, I export the movie and then continue adding audio clips.
My 100+ GB movie slimmed down to only 8 GB with this method. (The large size was due to having so many clips. The movie was from VHS footage of my son's little league all-star game, and the video had so many skipped segments that I had to split it into thousands of clips to remove the dropped ones. Very old VHS tape!).
I haven't upgraded to QT 7.5.5, but I heard that the jerky playback issue is mostly resolved with this new upgrade. I am in mid-project with about 5 iMovies, so I will probably plod along with my work-around method, not wanting to upgrade in the middle of any of them.
Hope this is helpful to you.

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