1. You can't boot Windows from an external drive. Not without a LOT of work, anyway.
2. You should have created the relevant recovery disks. Replace the drive, and recover the system from those disks.
3. You should have any critical information saved elsewhere so that you can copy it back after doing step 2.
4, If the drive is 'dying', any clone includes that potential 'dying' info.
For a PC, there are basically 3 categories of data.
The OS and original applications.
Whatever applications you have installed
Your personal data.
Only one of those is irreplaceable.