how does it work? Do I have to format it? does it has to have an windows operating system? suppose I want to save a new program on it, can I do it?
can I then use this newly installed program on my hard drive with 2 different computers with the same windows operating system?

All hard drives must be partitioned and formatted to be accessible.

An external drive does not require an operating system, your PC's operating system will see it and use it once formatted.

You cannot install a program on an external drive, then use it on another system. Install routines write data to the system hard drive, and the registry, regardless of where you install the program.

If you buy a new external harddrive, chances are it's already formatted.

If it's not formatted, or not partitioned and formatted the way you want it, you can do it yourself in a number of ways. One way is to select "Manage" by right-clicking on "My Computer", go to "Disk Management", find the external drive there, and then select whichever operation you need from the right-click menu on the drive.

Be careful to select the right drive!

This is true for the vast majority of programs you can buy and most free programs you can download.

There are some exceptions, however.

There are some programs that don't write anything (permanently) to the system harddrive or registry, and these are known as "portable" applications.

It's possible to install portable applications to an external harddrive, or a USB pen drive for that matter, and use those programs on any computer you plug that drive in to.

Unless a program you want to install is explicitly announced as a portable application, you can assume that it's not and that it will only work on a computer if you install it on that computer.

Some programs exist as both normal non-portable applications and as portable applications, so you can choose which version to download. Examples are OpenOffice, Mozilla, FileZilla and Thunderbird.

For more information on portable applications, I suggest you visit this site:

PortableApps.com

Okay, I want to be able to use a bought program on my laptop and my desktop computer, but it looks like it is working on my systems registry also. So I won't be able to install it on my external hard drive? is that what you guys are saying?

I see that they will have portable linux coming soon. will I be able to install that portable linux on my external hard drive? and then install that bought program on my external hard drive that has that portable linux and be able to use the bought program on my laptop and my desktop?

In order to boot to an operating system on an external drive, you must have a motherboard that supports this. Many do not. I'm not familiar with "portable Linux".

That's right.

Provided that your system can boot from USB/FireWire, then yes. Most modern PCs should be able to boot from USB and some will boot from FireWire, but you might have to enable it in your computer's BIOS.

If you have a several years old PC, it may or may not be able to boot from an external harddrive.

If your bought program is a Windows program, you *might* be able to get it to run under one of the Windows emulating or run-time environments in Linux, but then again it might not run at all.

I'd say you should assume it can't run unless you can find specific information that it does run under Linux.

One more question. Will an external hard drive back up information from computers registry about the installed bought program on it? Will it backup all the bought installed program?