Thanks. Can that image be stored on external HD?
Yes
Yes and you can schedule regular backups. Get a 1 terabyte external USB HD for about $80 bucks.
http://smile.amazon.com/s/ref=nb_sb_ss_c_0_6?url=search-alias%3Delectronics&field-keywords=1+terabyte+external+hard+drive&sprefix=1+tera%2Caps%2C213