BSOD HDD Failed - Install Windows 7 on external hard drive from boot

set boot to cd lah, HD will just boot nothing

I can confirm that my BIOS is set to boot from CD first, USB second. HDD has been removed from BIOS.
When cd is used to boot from it says:

No bootable devices - - strike F1...........etc..........

try using gparted live cd (burn from another pc) and reformat that drive

and then reinstall windows

lehnerus2000 said:

Were you able to run Ubuntu from the CD before (i.e. run it, not install it from the CD)?
It seems to be saying that the CD isn't bootable.

Do you have a W7 disk?
What happens if you try to boot using that?

Just tried from W7 USB. It starts up fine, but says it can not install windows on a usb drive. Says my computer might not be able to boot from from the external hard drive.
When I do it with just the HDD in it stalls in the black background after it says starting windows.
Incidentally, just tried to install w7 to the hard drive using another computer and it says the same thing about it not able to install hard drive connected via usb.

try installing from dvd and did you reformat HD first?

Tried to install from DVD on another computer (within windows) and I got the same error.
Just installed Linux onto the external hard drive (via another computer). It boots fine on that one, but when I went back to the Dell (HDD removed) it gave the bootmgr error again.
Does this sound like a hardware problem? because I'm just about ready to give up on this laptop now.

As far as I know you can't install Windows to an externally connected USB drive. Not without hacking some files and other tricks. Its made that way by design, it will only install to an internally connected IDE or SATA hard drive. You might be able to install to an external drive connected to an eSATA jack, but you would likely still have to trick windows into installing there. You need to replace the defective internal hard drive and try again.

EDIT: Is said optical drive a CD drive or DVD drive?