Will installing linux be possible via a virtual drive (my cd drive doesnt work)
Installing from a USB stick is straightforward. There are instructions somewhere on the Ubuntu docs pages. I prefer the ones at pendrivelinux.com If you have a large USB stick, at least 4 gigs & preferably more, it is also possible to install Linux so it runs from there, hard drive is not used at all. Performance
may be OK; it certainly will not be great.
my computer sucks and is very old. Will it have trouble running this umbuntu or whatever its called?
As a general rule, Linux works better on older hardware than Windows does on the same machine. There are lots of complications & exceptions, though. You can test this with a live CD; boot from the CD and you have a running Linux system, without changing anything on the hard drive.
will I have compatability issues with FLV player, Bittorrent etc?
The operating system (OS) is the basic software that manages the computer, organises the disk into files and directories, loads other programs, keeps one program out of another's memory, manages the sharing of computing resources among them, ...
If you change OS, say going from Windows to Linux, then
no Windows programs will run, or even install. Basically zero. There is a Linux program called Wine that lets some Windows programs run, mostly used for games.
There are music and movie players for Linux and several bittorrent clients, but unless the ones you are used to have Linux versions, you'll have to learn new ones if you switch.
Same for office programs. Microsoft Office does not run on Linux. Open Office does.
If I install it straight onto my external harddrive, will that be simple enough for me to work out what I'm doing? (terrible English!)
Maybe. Can your PC boot from the external drive? Can it if you muck about in the BIOS settings. telling it to boot from USB?
How much of a headache/ time will this give/ take me?
Probably quite a bit. I'd say it is worth it to escape from Microsoft products and avoid mucking about with "pirate" software. You might not find it so.