I'm pretty sure you'd be able to install it on an external drive if you wanted to. Not necessarily recommending it though bc it would be much slower than an internal
Ive installed it on many systems and it really depends on the system itself. If seen the fastest between 30 min to an hour but im sure other people have had other experiences.
It wont mess up your current drive. What do you plan on doing with it. If its already installed on your internal hd what would be the reason for putting it on an external??
You could, but xp won't work on any other computer then the one you installed xp on your external drive with.
EDIT: Well, now that i think about it, you might not be able to. It probably won't be recognized as an installable medium by XP.