For small drives (under 20GB) Refer to “Installing Mac OSV On A Flash Drive”
Plug in your HD and format it to “Mac OSX Extended (Journaled)” using Disk Utility in /Applications/Utilities/
Insert your Mac OSX install disc, and boot off of it by pressing “C” while booting
Choose your language and continue through the install untill you see the area where it asks you where you want to install OSX. Choose your Hardrive. Now you should be able to boot off it by holding “OPTION” durring start up.
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