First, use Disk Utility to partition a 7GB HFS+ Partition; the rest could be another HFS+ partition for your data. (Figure. 1)
(I use my 512mb Memory Stick as an example, make sure the partition you prepared has 7GB of space)
Noted that in order to boot an Intel-base Mac, the partition table must be in GUID format. (Figure 2)
Then, after the partitions are ready, insert your Mac OS X Install DVD.
Go to Disk Ultiity, select your External Drive; then go to the RESTORE tab, use the Install DVD as Source, the 7G partition as target. And hit restore.
This will clone the content of the Install DVD to your External Hard Drive, and thus your External Hard Drive could boot into Mac OS X Installer. (Figure 3)
Just hit OPTION at boot when you wish to boot into the Installer.
Wish everybody Happy New Year.
The New Flying MacBook Pro; Seatbelts sold Separately!