That's good.
If your wife is getting an external drive, you should use it temporarily connected to your 20" iMac (while it's still running). Then use a cloning utility (Carbon Copy Cloner or SuperDuper) to duplicate the internal drive onto the external drive. The duplicate should be bootable, so change the startup drive in System Preferences
Startup pane, and try restarting from it. If that works and everything (all of your user data) is there upon inspection, this backup will be better than your previous one, because you can boot from it if necessary.
Once started up from the external drive, you can run tests on the internal drive. If everything seems to be OK and the iMac runs fine off the internal drive, I guess you should keep using it as is. I don't know what the problem was. If you unplugged it while trouble-shooting, it may have done an SMC (power management) reset.
http://support.apple.com/kb/HT1543
It would be a good idea to get a
permanent external drive for the 20" iMac to use continuously with Time Machine. Then, even if the problem recurs, you'll have a backup of the entire drive to within one hour, and you can use it to recover.