Huffyuv is a good codec for quality (it's lossless), but not great for compression -- it creates smaller files than uncompressed AVI, but that's not saying much. It's what I've always used, but I had an external hard drive for clips when I was vidding on a laptop, and now I have a desktop with two large hard drives...in your situation, it may not be the best option.

There are many other codec options out there, though. Hopefully you'll get some suggestions about those with better compression. I know Lagarith is another high-quality codec option, but it probably also produces very large files (dunno, haven't tried it).

As far as jerky playback, do you mean after you've rendered out in Windows Media (or whatever) *after* editing, or are you trying to play those clips in your preview monitor in Premiere or in another media player? I would guess that playback issues would be due to the huge filesize and your computer not being able to keep up.