Yes. Just hook up the external disk and start up the installation software on the DVD. Early in the process, you'll be asked to pick the hard drive onto which you're installing the program. Pick the external hard drive.

You could also clone your current hard drive onto the external drive by using Carbon Copy Cloner. As I recall, there's a box you can check if you want the clone to work as a start up drive.

NOTE: If you're planning on using the external drive to start up modern Intel Macs (instead of older Power PC Macs), be sure the drive is formatted as a GUID partition. You can check this (and repartition if necessary) using Disk Utility (which you can find in the Utilities folder in your Applications folder).

I finally did it already! I have migrate a newer 10.3.9 (that's what i've got) to the firewire external hard disk, since my internal HD is dead. It is about 12hrs since migration and it still works fine.

Can anyone recommned what external HD works best and stable for an OS X?

Is it better to have power supply?

thank you!

Just my two cents...

You hit the nail on the head, the external HD must be a firewire drive, in my experience USB externals will not allow themselves to be selected.

To add to the conversation ... I added OS 10.5 system to a USB flash drive (16GB) to utilize as a startup device for maintenance and repairs on my laptop ... its a bit slow to start up, but once up, it operates almost as fast as the regular system SW installed on the computer.

I haven't tried it yet, but I think you could boot from the external DVD drive, go through the regular installation process using the USB as the destination.