In the 'New Project' window, give the project a name.
Next, click the 'Browse' button next to the Location drop-down.
In the 'Please Select Destination...' window navigate to the PrP Folder you created in an earlier step.
Ensure the PrP folder is selected.
Click 'Choose'
Back in the 'New Project' Window, in the 'Scratch Disks' tab, ensure that ALL items are set to 'Same as Project' and that the folder path is the same as the 'Location' box.
Click 'OK'
Note
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Next Step
To create a folder structure on the external storage device, see here.
Note
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Next Step
To import external files to your external storage device and import these files into PrP, see here.