You having fun yet? I don't see why it won't work on an external drive. Just be aware of its drive letter in "my computer"...
Sorry for the delayed responce

But I was able to convert my external HDD into an internal one and installed Ubuntu 12.04.
However, I couldn't install Vista because when It was "loading files" upon booting with the instillation disc, the computer would just shut down aburplty with no warning during any point in the "loading files". After 6 or so tries I finally got it but when it needed to restart for the first time (still during install) it had to load files again and this time I couldn't get it to load all the way. I thought it might have been a lack of power so I unplugged my external graphics card and USB devices I wasn't using. Didn't work so I went into the BIOS and disabled the USB, changed primary GPU to internal, and disabled some other devices like the audio. Except, stupid me disabled the USBs so I couldn't "hit any key to boot from disc" OR to even go back into the BIOS settings. I then had to manually reset the CMOS/BIOS by taking unplugging everything and taking out the CMOS battery, putting it back in about 30 seconds later.
This is where things get really messed up. When I plugged everything back in (both external and internal devices/connectors) and tried to turn on my machine, nothing happened. Nothing AT ALL. No fans spinning, no lights, beeps or humming. Nothing. I took out the PSU and tested it with another desktop machine, worked fine:not a PSU problem. Double checked connectors and CMOS battery, all fine.
I assume it is my motherboard which I've only had since last year! It's an MSI H55M-E33, good motherboard and I don't see how it would've been harmed in any way when reseating the CMOS battery (if that's whats causing the issue). I followed an online guide and used my MoBo manual to switch the BIOS jumpers to clear BIOS data.
Any Ideas?