Even a 5400RPM drive in external box will improve performance. It frees up the system drive to do system things, DVR, OS etc while letting the external do just game loading. It splits the load between drives. This eliminates a lot of stuttering at the end of races when saving game, and loading next track/menu etc.
I got my first external as i was fed up of the hitching at the end of races, along with the hitching after missions in Watch_Dogs. External drive got rid of that instantly.
The system should have had it’s own small drive, with another drive for games, but that would have put the price up even more. lol
Best scenario is a 7200 or 10,000RPM Drive or SSD in a USB 3.0 enclosure. I use a hybrid HDD/SSD drive mainly and it flies along nicely. Also loads games quicker. 
But any drive will improve matters, but to be honest, the difference in price makes 5400RPM not even worth it unless you have one lying around. you can get a 2TB USB 3.0 drive for around £70 in the UK, 3TB for £80.
Thanks very much for such an exhaustive answer Well, here in the Czech Republic there is quite significant price difference between 5400 and 7200 (circa £27) which is (for a student) a lot of money. Not to mention the availability of the 7200 is worse as well. I do not mind having few seconds slower loading times, my only point in getting a HDD is to get rid of all those annoying sound glitches & frame-rate drops and what I´ve understood the 5400 should do the job just fine, right?
Unfortunately no, even with the game on an external 7200rpm drive, certain tracks still have frame rate and sound issues (Le Mans, Long Beach).
YMMV
Toni
Details on external drive support and troubleshooting:
http://support.xbox.com/en-US/xbox-one/system/manage-storage#c6a6162f68bd48799c0240652e60d71d
http://support.xbox.com/en-US/xbox-one/system/console-doesnt-detect-external-storage
Getting an external drive guarantees nothing. Disc reads are only one potential bottleneck.
If you have an external 7200 use it as it gives you a chance for better performance.
If you don’t yet own one don’t expect all issues to be fixed by getting one.
I see… well that kinda sucks 
Anyways, thank you guys for your feedback cheers
Except it does guarantee improvements.
Using only the internal drive means system calls to the HDD, and game loading and saving all at once. While it’s “Only one bottleneck”, it is still a bottleneck.
No, it won’t fix all issues as some are game related specifically. Such as low framerates in specific areas that are more GPU bound than HDD transfer rate caused.
But splitting the load between the internal drive for system tasks, DVR etc, and having an external drive for game data loading will improve many games which stutter when saving/loading/streaming.
Games that are improved by external HDD use include Forza’s at the end of races, Watch_Dogs when you complete missions, Assasins Creed Black Flag when discovering new areas and finishing missions, Dead Rising 3 general streaming data.
These are just a few of the games i’ve noticed improvements in. Telling people it doesn’t change anything is flat out wrong.
It’s like having to pump water through one pipe, and then putting another alongside it to improve throughput. It won’t double performance, but it will allow extra flow.
There will be certain issues it won’t cure, like the issue on Le Mans straight. But not everyone gets that either. I get it on my TV, but not my monitor. So yes there are many things that can affect performance, but saying something doesn’t work with evidence to the contrary is less than helpful.
You have misread what I said. I never said it will not improve performance.
I said there are no guarantees and I said it will not solve all issues.
I have seen posts by people saying they bought an external drive and they saw no performance improvement. Did they set their expectations too high? Did someone else set their expectations too high for them? Did they expect the Le Mans straight issue to be solved.
Also sharing personal experience to help people is awesome but it is only 1 persons experiences.
Is there a website that states what issues, in what games will be solved by getting a 7200rpm external drive?
Without that I personally would be more cautious in advising someone who has said they need to be careful with money and the 7200s are quite expensive in their country.
Yes there are saving / loading functions that logically should be improved by using a quicker drive but what in game issues are and are not solved by that? You have given some examples but Fear Tractorist asked whether a 5400 will get rid of all stuttering and sound bugs. I don’t believe a 7200 will get rid of ALL stuttering and sound bugs. It improves saving and loading functions - are they responsible for all sturrtering and sound bugs in this game?
Edit: example - the rev hang bug. I don’t have a gamebreaking version of it but many do. I have a 7200 hdd. Some suggested that as the reason. Some have bought a 7200 but still have the game breaking bug.
What I’m most interested in is the external curing the FM5 in-race hiccups. They are not that frequent, but they’re there. Would be nice to have gameplay like FM4 again… completely seamless and uninterrupted.
I’m trying to be realistic, but does it really help? Doubt it.
Right, Gotcha.
No getting an external drive will not fix all issues. Some of the sound ones are present since previous Forza’s. Some people get them, some don’t. Which is what makes tracking them down difficult.
Getting an external drive is recommended by me as i have seen the same issues with the same games on my own Xbox One, and that of 5 other family members and friends. Which is why i recommend it. When it comes to Forza, some people see some issues, other people see other issues, and some people see none at all. but of the 6 systems i’ve seen first hand the one suffering the most is running on internal drive only. But bizarrely doesn’t have the rev hang bug. lol
I’m currently getting a error message when downloading Forza Horizon 3, I was able to download Candy crush with no problems. I’ve tried every solution (changing SoftwareDistribution folder names, WSReset, etc.). If I download this on my Laptop which has windows 10, move it onto an external hard drive, then copy it back onto my Desktop computer, would it be able to run? Is this Solution Possible?
I recently got a 1.8TB WD My book. How do you move a game from the internal to the external HDD. The external drive has View Contents, Rename, and Format, even though there is a game on it It also has the blue triangle in upper right corner.
The internal drive has view contents and Install here by default. I assume the install here switches from the external (in my case) to the internal
I don’t see either a move or a copy command on either drive.
XB1 still misses the feature to copy ‘everything’ to the external drive. You need to do it game by game via ‘manage game’.
See last point. …
https://support.xbox.com/en-US/xbox-one/console/manage-storage#57e3efa93d954d0399903fe37ff2e5ec