Can the laptop external hard drive contains OS?

It can work, but is rather complex to setup. One way you can try, but no guarantee it will work without knowing more specifics about how you laptop is setup. You have to modify the boot.ini file at the root of the internal drive, to be something like:

[boot loader]

timeout=30

default= multi(0)disk(0)rdisk(0) partition(1)\WINDOWS

[operating systems]

multi(0)disk(0)rdisk(0) partition(1)\WINDOWS= "Windows XP 1" /fastdetect

multi(0)disk(0)rdisk(1) partition(1)\WINDOWS= "Windows XP 2" /fastdetect

Again, the above may only apply based on certain factors, such as the paths that Windows installed on each drive, etc. (no spaces should be in the first part of my lines, the post editer here has destroyed the post as it should read, so I had to add spaces to make it display at all)

The more surefire way however would be to reinstall Windows on the external drive and be sure as you install that you choose the correct options as to not reinstall it over the internal drive's copy of Windows. This will ensure your boot.ini is setup correctly.

Well, several factors play into this.

Your external must be capable of booting an OS. if it's not, you have to format it and make it capable.

Your BIOS settings have to allow for you to boot from the external. Go into your BIOS and change the boot priority to external. Then when you boot, it will allow you to boot off the external drive.

I don't know why you would want to do this but that's all you have to do.

Oh, and you can only run one real OS at a time. you can virtualize, but that is far beyond the question asked.

As long as your external drive has its own power supply / line cord you will do no harm to the laptop, however if it is powered through the usb you could damage the laptop and its battery.

It depends on if your laptop supports booting from USB. Look in your bios. It just needs to be in the boot sequence, if it is it will look on the usb for a operating system. If its there just change the sequence