Ideally it can be set up to use a external HD to run an OS. But the main problem is the USB port will dramatically decrease the speed your pc will access windows files. If you have a 3.5" HD in an enclosure and don't want to make partitions, which you are correct about by the way in terms of WS_E conflicting with XPH_E, then I recommend taking out the HD from the enclosure and just connecting it internally. This way you will get normal speed, a normal OS set up, and an open USB port.
Hope this helped!