Just sharing my experience here, in case it helps others with either determining causes of crashes or decisions on using external drives.
I’m using a dell XPS 15, i7, 16gb, GTX1650, which gives me some decent performance on medium settings and I could probably turn things up a bit to get some better visuals.
I have been experiencing some CTD issues recently and have had MSFS installed on my external Samsung T7 500gb drive, which has lightning fast read/write speeds through my USB-C port.
I noticed that sometimes, the sim would freeze for up to 20 seconds, and sometimes it would just fail and crash to desktop randomly. I know there are countless potential reasons for CTD, but one obvious thing I tried is to reinstall the sim on my internal C:/ drive and move my packages folder there too.
I’ve only had one flight since moving, but the experience was somewhat smoother, with only very momentary pauses and no crashes. Which is the first time for a while. So far then, moving the installation to my C:/ drive has helped solve this issue. I can only assume that the external drive was choking when a lot of data was either being written to it or from it… some more flights will prove whether this has made a long term difference, and I’ll check back after a dozen flights.
In the mean time, hope this might help.