Q: Boot Camp on external drive?

No. Windows will not boot from nor install on an external drive.

You may want to investigate Winclone.

I've been messing with different MacBooks (haven't tried iMac unfortunately, but I think it'll be similar) and it's definitely possible to install Windows on an external drive. I haven't tried this with Windows XP (I think you'll have to give up on that), I used only Windows 7 / Windows 8. There're at least two options:

1. BIOS emulation mode. Use this guide as a reference: http://bleeptobleep.blogspot.ca/2013/02/mac-install-windows-7-or-8-on-external.h tml

This one will make it work even on a USB 2.0/3.0 drive (although it worked for me with one USB3.0 enclosure but refused to boot from another). I also assume it'll work with FireWire as long as necessary drivers are installed.

2. native EFI mode. Use my last post as a reference: http://forums.macrumors.com/showthread.php?t=1414769

This method most likely won't work with USB or FireWire, only Thunderbolt which your iMac doesn't have.

It's definitely not supported by Apple so officials won't help you here Another way to do it is cloning partitions from one disk to another, which I never tried. I also read about crazy things that involved VMWare Fusion etc.