That's okay, go to the beginners' area, we all have to start somewhere. As to installing on an external drive, sure. This page outlines most of the whys and wherefors of using an external Linux boot drive:
http://www.ibm.com/developerworks/li...-fireboot.html
If you have USB 2.0, ignore the parts about Firewire. Good luck.
[EDIT] Summary: Turn the external drive on, then boot from the CD. If Ubuntu recognises the drive, you're in business. Installation will be self-explanatory.