The solution for all of these tasks turned out to be my trusty SanDisk Cruzer Fit:
Using BurnAware Free I ripped the CDs and DVDs as .iso files to the USB drive, then mapped the .iso files to a drive on my laptop using MagicISO (which wasn’t strictly necessary since the ripping of audio and video could have happened directly from the discs). Next, I ripped the audio tracks from CDs to MP3 using Windows Media Player and video tracks from DVDs to MKV files with MakeMKV, which I was then able to move to the XBMC drive.
In dealing with the full laptop drive (no thanks to the ridiculous Windows 7 winsxs folder), I simply left one of these drives in the USB port of the laptop, and moved the default location for media files there.
So, bottom line, the SanDisk Cruzer Fit is a cheap, tiny, multi-purpose USB drive that can always be handy in your laptop bag, or stay in a laptop permanently to add an additional drive with capacity up to 64GB. Heck, you could even use this drive to carry your own personal instance of Windows 7 to run portably on family members’ machines when travelling!