You can certainly configure iTunes so that it does not make use of your system (C:) drive for media and leaves it in its current location. To do so, assuming that the media on your exteral HDD is currently not listed in your iTunes library:
- Run iTunes
- Select Edit > Preferences > Advanced (if necessary, press Ctrl-B to enable the menu bar)
- Make sure that the options to Keep iTunes Media folder organized and Copy files to iTunes Media folder ... are unchecked
- If you now use File > Add Folder to Library... and select the folder(s) containing your media on the external drive your songs will be added to the iTunes library without moving or copying them. The result of this is to add entries to iTunes' database containing links to the media files in their existing location.
However, although this approach "works" it results in a "split" library, where the iTunes database (iTunes Library.itl) is on the system drive and your media is elsewhere (possibly more than one location). Such a layout is difficult to back up and to migrate between computers. A much more robust solution is to have your media and your library database, artwork, other associated files in a standard folder structure on the external drive, looking like this:

Turingtest2's user tip on Make a split library portable for a detailed description of the preferred layout and how to achieve it. On the system I'm using right now I have exactly this setup - iTunes is installed on my C: drive (32GB SSD) but my library, in the layout illustrated above, is on a 1TB USB 3.0 drive (of which the library uses around 750GB).