It doesn't matter if the operating system supports NTFS as it's filesystem, you'll have to partition your external hard drive in order to install any operating system in it. The OS needs it's own partition.
First of all, is the hard drive bootable? i.e. can you select it from the BIOS bootmenu? If so, you can just put in the installation CD of any GNU/Linux distro and select to install it on that drive. Shrink the NTFS partition from the installer's partitioner and use a guided partitioning method to install the distro on the free space that is left. You can google for tutorials on how to partition drives.
Once you partitioned your hard drive and installed the distro of your choice in it, you can easily access your files on the NTFS partition by mounting it from within the operating system you just installed - you can use ext3 or any other standard GNU/Linux filesystem. You can then move the files to a folder in your OS and wipe the old NTFS partition to have the OS use all the external hard drive.
If the drive isn't bootable you can backup your data and format it in order to make it bootable. Alternatively, there are a few guides on installing GNU/Linux on non-bootable hard drives here.