MAC Mini & 2.5 USB Hard Drive Issue

Strange thing happening with a new MAC Mini:
For Christmas, I bought my wife a brand new MAC mini. Everything has been working fine. So, for our anniversary, I bought her a 120 gig USB hard drive (I know, I'm such a romantic
Anyway, ever since I hooked up the hard drive (USB Drive) to her system, it seems that when I first turn the MINI on, the keyboard and mouse completely stop working. once, I had to hold the power button in to hard boot it, then, when it restarted, everything was working fine again.
Tonight, when I turned the MINI on, it did the same thing. No keyboard or mouse. Then, after I hard booted it, the mini never booted up. Black screen. USB hard drive light was on, but, no MAC power light and screen was black.
Now, I just unplugged the USB drive and all is working fine again.
It seems that the USB hard drive being plugged in while powering the MINI up is giving me some grief.
Does anyone have any ideas as to what can be happening here? It is a brand new MINI with Leopard installed. I highly doubt I have a defective MAC because everything was fine until I plugged a USB HDD into it. With the drive unplugged, it seems that it works fine.
No Operating System(s) are on the USB drive. Just pictures and movie files.
Here is the drive I got her:
http://www.walmart.com/catalog/product.do?product_id=8110750
Any ideas will be greatly appreciated.
Gary

I'm sorry. I should have been more detailed in my description. It is a Toshiba drive. here are the specs:
The Toshiba HDDR120E02X 120GB Hard Drive is USB-powered and includes an internal shock sensor and ramp loading technology. Ready to go out of the box and certified to work with Windows XP and Vista as well as Mac OS 10.3.9 or later.
Technical Information
Storage Capacity
120GB
Drive Performance
Data Transfer Rate
480Mbps External Maximum USB 2.0
Interfaces/Ports
Interfaces/Ports
USB 2.0 USB
Physical Characteristics
Form Factor
External Hot-swappable Portable
Miscellaneous
Compatibility
USB 1.1
Plug n Play
I didnt have it hooked to the keyboard though. I have had some trouble trying that in the past, so, other than my mouse, nothing else is plugged into the keyboard.
Thanks again for your help.

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