kman82: Could the external hd via usb connection on the home server be a problem even shifting files locally on the home server pc can be laggy. I think I need to install usb 2.0 drivers
Ah ha!
You didn't mention that ;-) That will be the cause of your speed issues, USB is very slow compared to internal drives.
I strongly recommend you don't use USB drives on WHS except for backups. All content (shared files etc) should be on internal drives.
Is there space in the case to put another drive? It is possible to take the drive out of the USB case and just add it, but you may have to back it up first otherwise you will loose the data on it.
If you need more help just ask, WHS is a great product!