Here’s a tip when you want to upgrade an existing 10.6.8 system on an external drive and the Mountain Lion (10.8) installer says, “OS X cannot start up from this disk.”
In this situation, you need to perform two steps: First, make sure you can connect your Mac to a reliable and current backup, preferably a clone of your 10.6.8 system. Carbon Copy Cloner or SuperDuper work fine for this purpose while TimeMachine is also an option. Second, you will most likely need to erase your external drive completely so Mountain Lion can perform a clean install and create the recovery partition. This last step is important! If you don’t erase the drive that currently has your old system files, the install will not proceed.
When Mountain Lion finishes installing on your external drive and during the setup process, use one of the menu options to transfer your home folder(s), applications, and network settings from your Time Machine backup or cloned system. Once your data is restored to your external drive, give Mountain Lion a test drive to see what applications work and which ones need to be upgraded.