Yes, software can't install unless there's an OS to install to. If you install OS X on that disk, it will wipe out any data you have there. If you can copy off the data before you do that. Once you have the data copied a better option may be to simply clone your present internal drive to your external using using a cloning utility likeSuperDuper. Then you will have a bootable backup of everything on your internal hard drive. The advantages are in the event of a hard drive problem you can always boot from the clone and keep working until it's fixed, You also have a drive configured with all the software you normally use so it's a better test to see how it functions in the same environment as your other software.