No need to shout, I can read "external" just as easily as "EXTERNAL."
I still don't understand why you removed the internal hard drive. What was the reason for doing this?
You say it's working as an external drive. I assume that you have an enclosure for it then?
The easiest thing for you to do is to hook it back up to the machine you want to use it in and install Windows XP from there.
If you do have an enclosure and it can be hooked up through USB, most motherboards will allow you to write to these drives whether you have Windows installed or not. Do this: when you boot up the computer with the external drive plugged in, go to your BIOS and see if there is a hard drive detected. If so, then you shouldn't have any problems installing XP to it.
If you can't do it externally, put the drive back into the machine you want to use it in and then make sure the BIOS can see it.
XP setup discs should boot by themselves, without the need for a boot floppy disc. Make sure your BIOS has the proper options set for CD-ROM boot.
Windows setup will allow you to partition the drive, make it active and ask you if how you want to format it (FAT32, NTFS. Go NTFS).
The reason that you need to have it hooked up to the computer you are going to use it in is so that Windows setup will identify all of your hardware and install the proper drivers for it. You can NOT setup Windows from your other machine using the drive externally and expect it to work properly.
Let us know how it goes. And remember: google.com is your best friend.
By the way: you probably posted this in the wrong section. I'll see if I can get a mod to move it to another section so that more people see it.