Yes it's entirely possible, what you would do is take a laptop HDD or desktop HDD, put it into an enclosure, disable the internal laptop's HDD from booting up or all together and see if you can boot from the external drive.
My sister's 600m wasn't working and so I took an old 4GB laptop HDD, put it into an enclosure, copied a windows 98 installation on to there and booted from there. Loading windows was slow as hell since it only supported USB 1.1, overall I'd say I'd be a bad idea because the USB bus is slow as hell, high latency and just not a good idea. Stick to an internal drive or get a PCMCIA converter to IDE to run a drive externally.