External just means that any one part of your watercooling loop is outside of your computer, doesn't necesarily have to be outside but that's pretty sweet my friend
I'm running an XPM2500+ at 219mhz fsb/11 multiplier (2400mhz) , last week when the temperature dropped below freezing I was seeing a core temperature of 32-34 degrees at 100% load crunching cancer research data
I used to sit in my study by the window working on my PC and thinking how much colder the air outside was to be flowing over my radiator and it all went from there ! The silence is also nice - pump, reservoir and fans are all outside a double-glazed window...