In this guide I will go through the process of booting up from an external USB hard drive in VMware fusion.
The main use case is the ability to take the hard drive of an existing physical server and be able to boot from that physical hard drive into a VMware Fusion VM.
Another use case (my latest use case): I enrolled in a technical training course and the vendor provided/shipped a bootable USB external hard drive with a Linux OS installed as a LAB, with the expectation that I was going to boot from it using a PC, that works great, but I wanted to use my Macbook and be able to run this LAB while on the road.
As soon as I tried to boot from it using my Mac I got a kernel panic, due to missing drivers, etc.
So, I decided that I was going to use a VM using VMware Fusion, as follows:

1) Check the system before plugin your USB external hard drive:

john@mac.local:~$diskutil list
/dev/disk0
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:      GUID_partition_scheme                        *251.0 GB   disk0
   1:                        EFI                         209.7 MB   disk0s1
   2:          Apple_CoreStorage                         250.1 GB   disk0s2
   3:                 Apple_Boot Recovery HD             650.0 MB   disk0s3
/dev/disk1
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:                  Apple_HFS Macintosh HD           *249.8 GB   disk1

2) Plug your USB external hard drive and look for the new disk:

john@mac.local:~$diskutil list
/dev/disk0
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:      GUID_partition_scheme                        *251.0 GB   disk0
   1:                        EFI                         209.7 MB   disk0s1
   2:          Apple_CoreStorage                         250.1 GB   disk0s2
   3:                 Apple_Boot Recovery HD             650.0 MB   disk0s3
/dev/disk1
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:                  Apple_HFS Macintosh HD           *249.8 GB   disk1
/dev/disk2
   #:                       TYPE NAME                    SIZE       IDENTIFIER
   0:     FDisk_partition_scheme                        *500.1 GB   disk2
   1:                      Linux                         134.2 MB   disk2s1
   2:                  Linux_LVM                         128.8 GB   disk2s2
   3:                  Linux_LVM                         22.5 GB    disk2s3

3) In VMware Fusion create a VM as follows:

Create a New VMware Fusion VM:

Customize it as you wish (I removed sound, printers and modified the RAM and CPU,etc)

Also remove the VMware fusion created VMDK as you don’t need it (Unless you actually need it)

OK, the VM creation is complete, now you have to actually use the physical hard drive as shown below

4) Create a RawDisk VMDK in the newly created VM that will point to the USB external hard drive

john@mac.local:~$ /Applications/VMware Fusion.app/Contents/Library/vmware-rawdiskCreator' create /dev/disk2 fullDevice ~/Documents/Virtual Machines.localized/openstack.vmwarevm/usb-ext-hdd ide

5) Add the disk to your VM configuration (.vmx file)

ide1:1.present = "TRUE"
ide1:1.fileName = "usb-ext-hdd.vmdk"

6) Power on your VM and voila! you should see your VM booting from the USB external hard drive