You could set the Boot Order in BIOS to Optical Drive, USB and finally HDD and install XP to the External HDD. But as The Chas has already said not everything is going to work if anything at all will.
Your problem here is that you have a Domestic Computer and you need a Business Class Computer as they have support for XP still.
If you have sufficient room on the HDD you could install XP Virtually on the Vista OS with M$ Virtual PC which you can download from here
http://tinyurl.com/3ccjz8
That is probably your best bet but its not a great idea. Even worse is using an External HDD for full time use as these drives run much hotter than they would in a Computer and are far more subject to damage from Heat and Vibration so plan on having a very short life if you plan on using this external Drive full time.
Do not expect it to last and you will need to perform regular Data Backup's to minimize the risk of Data Loss from a Failed HDD. Even if you where to modify the External Case with a Massive Heat Sink and Fans to provide Active Cooling the drive will still be subject to Vibrational Damage from people bumping the desk that it is on or the drive physically getting droped while it is running.
Col