I have a failing hard disk. Which linux said that I would need to replace. I'm still saving to buy a new one. And since I have an external hard drive I want to use it as primary boot device where I will install the os. Windows 7 preferably. Here are the details of the hard drive: http://www.seagate.com/www/en-us/products/external/freeagent/freeagent_go/#tTabContentSpecifications My laptop can boot from external hard drive. What other things do I need to consider before doing this? Will the performance decrease if I do this? Is the installation still the same if I installed the os on an external drive.
External USB 2.0 Drive: Yes, definitely slower.
External e-SATA Drive: No, speed should be the same.
The Seagate drive you linked to appears to be USB 2.0 only, therefore is will be slower.
Check if your laptop has an e-sata connection, and look for an external drive with such a connection.
Another alternative to replacing your existing drive is to swap out your DVD-ROM drive with a second hard disk caddy. (Assuming it is a SATA connection internally). This works well for me.
USB devices are very slow compared to internal drives.
No. Windows was not designed to install to a USB connected device. I believe it is technically possible to get it working but it is far from trivial.
Have you considered simply removing the drive from the external enclosure and installing it into your computer?