I'm not sure about installing or recognising an external drive - though I have two externals, I've never tried installing Windows from them. I'm just going by what happened with a firend's Vaio when her internal DVDRW crapped out - she replaced it with another internal model and all was well.
Maybe someone with a laptop and external drive(s) (DrageMester?) can advise you on that.
Edit: thinking about it, if you have the option in your laptop's BIOS to boot from USB (assuming an external drive would be connected that way), you should be fine.