Re: Install on external hard drive...
For all the pro apps (and most Mac apps) you must install the actual application on your Bootup disk (e.g. the internal HD on your Mac that runs OSX).
I would leave the Logic 8 application in it's current location.
You can choose to install the extra content on an external drive using the Installation app on the DVD.
In the Logic Box is an Installation booklet. I'd recommend reading through it before you begin installation.
I upgraded from 8 to 9 and the process was very smooth. It only took an extra 2 GB as it didn't overwrite existing sampler instruments and apple loops that were already on my system, but it did add the Voice Jam Pack and new applications (Mainstage 2, Logic 9 etc).
Bear in mind the installation will rename your old Logic.app to Logic 8 - and this can co-exist happily in your applications folder with Logic 9.
btw, you require OSX 10.5.7 to be able to run Logic Pro 9.
There's more info here: