first I will list my system,
Dell Xps17
Windows 7 64bit i5 processor/  
8Gb ram/500GB (7200rpm SATA HD)

Im looking to move some of the functions to an external drive, but I'm not sure of what type of external is best for my DAW setup and what files or programs should be moved over to an external drive and still keep functionality intact. I'm looking to take some of the strain off of the C drive. Is this the right approach? My C drive is about 3/4 full (strictly Used for recording and downloading recording based software) no junk.


Suggestion, advice........Thank you, Ken

👂

My self for laptops is a SSD drive for OS.  And then you put the 7200 in your DVD drive bay for data. DVD drives are rarely needed anymore. Pick up an external DVD drive.   
An external hard drive can be used for data back up. USB 3.0 being the latest and greatest.  
I don't think I'd want to be using a USB external drive as my audio drive.. I know people do , but I'd rather it was all inside the machine.  To me there's enough issues with USB and all the stuff a DAW uses like the interface and your controller.