External SATA HDD

As the title says, can i fit one of these and install a fresh OS on it like Windows 7 for example or will i be just better adding the HDD to my tower case.
I already have two HDD's in my system with Vista Ultimate 64bit and Vista Home Premium 32bit.
What would i have to do if i fitted another clean HDD to install Windows 7 on it??
I have been tempted to simply unplug the existing HDD's to avoid confusion and reconnect them afterwards but am not sure if this is the correct way of doing it.

Thanks.

I have been using WD External Hard Drive with my Vista, and never really faced any problem.

I think what he was asking is could he use an external E SATA drive to put an os on. ?

Go for an eSATA external enclosure and a PCI rack mount for the eSATA connection to the SATA ports on your motherboard. You'll thank me later, since it blows USB 2.0 away and is basically like having an internal drive in your system, only its external.

You can choose the boot order in the BIOS if not using a RAID array.

Connecting an external hard drive to your computer is a quick and simple way to expand storage capacity, and it comes without the hassle of diving inside the PC and messing with all those wires, cables and connections. If you use a notebook as your primary computer, an external hard drive brings with it much needed added storage capacity that is otherwise hard to implement.

You could use an external SATA drive to load your OS. It is same as the internal hard disk except for the merit of portability. If you are intending to use an external HDD make sure that the drive is always well connected to the pc through ports, if any loose connection does occur there is a risk for you to lose the data that you were working on.