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•Step 1: Use Apple's Disk Utility to format your external disk. Select the Disk in the left panel, then go to the partition tab. Press the Options button and make sure it is set to MBR. Next Make a partition or two (I made two HFS+ partitions).
•Step 2: Create a custom Windows ISO using the directions outlined here:
I'm not absolutely positive this is required, but it worked for me and seems to make sense as well. You're welcomed to try with a normal XP disc and let me know if it works.
•Step 3: Take out the internal harddrive, unplug ALL USB/FireWire devices except for the one you are installing on (do NOT use a Hub), and start up your Mac with the custom XP CD.
•Step 4: Hold down Option while starting up to select the Windows CD or hold down the C key.
•Step 5: Select your HD and do partitioning at the Windows XP Setup screen. Format the partition as NTFS. Reboot your mac when it is done installing the setup files. Your Mac may not boot into Windows, but instead the Windows CD or just a grey Screen. If that is the case, continue to step 5.1.
•Step 5.1: Reinstall your internal HD and boot into Mac OS X. Your external HD's Windows partition should be available on the desktop. If you open it you will see a couple of boot files and the WINDOWS folder. Now go into System Preferences > Startup Disk and select your Windows partition and reboot.
•Step 6: Continue to install Windows as you normally would. Press Yes at all the prompts talking about unsigned drivers. That is normal.
•Step 7: After installing, shut down your Mac and reinstall your internal HD if you haven't already. Your Mac should boot directly into XP. If it boots into OS X, simply select the partition once again in the Startup Disk Preference Pane. Watch XP load entirely from your USB drive, and then eventually boot back into Mac OS X because you are tired of Windows :-P :D
If you have success with this method, please let me know. Also open to any questions you have. Good luck!
rEFIt - »refit.sourceforge.net/ (A nice EFI replacement that will let you select the Windows partition on startup)
E-Mail thinkdifferent1984 AT mac DOT com