"I'd be grateful if you could let me know if this is possible and if it is, a guide to how I would do this please?"
Here's what I would do:
1. Make a BOOTABLE backup of my current internal drive (see below)
2. Reboot from the backup drive
3. Erase, and then re-partition, the internal drive
4. Install a copy of the OS you want on the internal drive
5. Create a new account on the internal drive (use your old username & password)
6. Update the OS on the internal drive "as far as it will go"
7. Use "migration assistant" to transfer your apps and user data from the backup to the internal drive.
That should do it.
You may be an "extreme newbie", but if you want to accomplish what you're asking, then you'll have to start learning!
I'll guess that you don't have any kind of backup right now.
Here's how to create one, cheap and easy:
1. Get one of these:
http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias=aps&field-keywords=usb+sata+dock&x=0&y=0
(many items shown, they all work the same, just pick one you like that's cheap)
2. Get a "bare" SATA hard drive from the vendor of your choice
3. Download CarbonCopyCloner 3.4.6 from:
http://www.bombich.com/download.html
4. Put the drive in the dock, connect it to the Mac, turn it on
5. The drive won't be initialized yet. Open Disk Utility (in the Utilities folder) and initialize it to Mac format, GUID partition map
6. Once initialized the drive will mount on the desktop. Give it a meaningful name.
7. Launch CCC. On the left, choose your source (internal) drive. On the right, choose your target (docked) drive
8. Choose to do a complete backup and let CCC do its thing.
9. When done, you will have a BOOTABLE backup drive.
To boot from the backup, do this:
1. Restart the Mac
2. As soon as you hear the startup sound, hold down the "option" key and KEEP HOLDING IT DOWN
3. In a few moments, the Startup Manager will appear
4. Use the mouse or the arrow keys to select the backup drive, then click to continue.
5. The Mac will boot from the backup drive.
IMPORTANT: since you "cloned" the internal to the backup, it will look EXACTLY like the internal. Check "about this Mac" under the Apple menu to be certain of which drive you are booted from. I suggest that you give the backup a different desktop picture so you can easily tell it apart from the internal.
This should get you going.