I recently used a small flash drive to install Ubuntu 11.10 onto my computer
I really don't understand why you are trying to use the external 500GB HD. You used a flash drive to to install 11.10 and you no longer want 11.10 so why not use the same flash to install 10.04 since you have already done it successfully?
In unetbootin, do you have USB in the Type box?
In the Drive box, does anything show?
Do you have a partition on the external drive?
Have you selected the check box Show All Drive (Use With Care)?
I think the problem could be that you do not have a partition on the external but I've only used unetbootin on flash drive so I'm not really sure. That would be the simplest thing to do, create a partition on the external and try again.