While Apple supports their OS on some firewire drive, microsoft does not. You must put the OS on the internal drive. This is NOT Apple's doing.
However you can supplement your storage with an external drive and put your files there.
I'm seriously considering buying a Macbook Pro. I want to use this as a replacement for my desktop using Boot Camp since its getting on in years. BUT 80 gigs just won't cut it, and I don't wanna spend $100 on just 20 gigs more. I know that when you put XP on the Macs you have to set aside a certain amount of partition space from your harddrive for XP, say, for example, 40 gigs for XP and 40 gigs for OSX, but thats not enough space for me. Can I just hook up an external harddrive to it and use that solely for XP and then use the Macbook's harddrive just for OSX? Thanks for the help!!