Installing Mac OS X on an External Drive

It all started with a freezing problem. Likely because my drive was too full, but that is yet to be determined. I updated to 10.4 thinking that this might jog something and fix my troubles...not so. I have also pared down my drive to leave the suggested 10% free space.
I then bought TechTools Pro 4 and am trying some of their suggestions, One of which is to install their software and what they call their eDrive on my external firewire hard drive. I can't seem to do this as it does not offer it as a place to do the install. I am left believing that I need to install Mac OS on the external first and then TechTools. I may be grasping at straws?
Any suggestions out there?
eMac G4 1.25GHz 40 GB Drive   Mac OS X (10.4.7)  

Thanks for the suggestion.
I did boot from the CD and tried running everything, but often it hung...numerous times. I contacted the support group at TECHTOOLS and they recommended creating an eDrive on my external firewire drive. I tried this too....first I had to change the drive formatting from MS DOS (I was unaware that the drive came formatted this way), then it did not work...it hung again.
For all the hours I spent attempting to rectify my own problems, I created more. The internal start-up volume finally became currupted and I am no longer able to start the computer from the internal drive. It seemed to not be able to mount on my last attempt.
It is now in the local shop letting someone with more experience tell me what is up. I hate to say I gave up...but alas I conceded my defeat.
Good news....Apple Backup really does work for restoring files. I have dusted of my old iMac and am back on line.
Have you had extensive esperience with TechTools? Any suggestions about the creation of the drive on the firewire hard drive? What formatting selection is the correct one....I choose journalling as that is what the mac help file indicated was the most common. I did not find any suggestions in the TechTools documentation or web support to indicate the desired formatting.
eMac G4 1.25GHz 40 GB Drive   Mac OS X (10.4.7)  

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