|Dual booting Vista and Windows 95 is going to be difficult. On a laptop change that to virtually impossible. The problem is driver availability. The Windows 95 CD won't have drivers that didn't exist until years in the future. Most hardware manufacturers feel that providing drivers for Old operating systems is simply a waste of valuable resources.|
Using a virtual machine is a much easier approach. The nice thing here is that it doesn't matter what hardware your computer has, the client OS will see only the emulated hardware which was chosen for best compatibility.
Microsoft does not support installing any version of Windows unto an external drive. They will in fact tell you that it can't be done. Unless you are an expert this is best avoided.