Windows on external drive

Why can't windows not be installed on an external drive? After all, it's a VM and windows should not know. I can only finish the install on my main Mac drive. Linux doesn't care where it's installed.

 

I also have no idea why. I tried it on different external disks but after the install had finished windows did not start. It complained about not knowing the start disk. After installing on my internal drive, everything went flawless. The retail version of windows 11 on ARM works perfectly.