1) Close iTunes. 2) Move your iTunes library folder (which is found in home folder) <user name> Music > iTunes to your external drive. Make sure than when you move the folder, that the subfolders are included just as they are. 3) Open up iTunes > Preferences > Advanced and change the default location to where you just moved the folder on your external drive.
That should do it.
Looks like I was too slow in typing. lol