Is my new external cd burner useless? I've lost my activation key.

Check the product page at LG.

http://www.lg.com/us/support/index.jsp

Activation key for an optical drive? I don't think so.
The cd you are refering to is most likely a cd containg bonus programs that may require a key which would be printed on the disk cover. It will not stop the drive from working only the software that came with it.
Go to the link provided by badge to see if there are any drivers or software available for your model, have your model number handy.

Exactly.

Thanks for the speedy and helpful reply guys, legendary.

Checked out what you said and there doesn't seem to be any owners manual. I'm very relieved that I should still be able to work it!
My prob is when I try to burn a cd it keeps using the default internal cd drive which isn't working. It doesn't even register that I have an external drive connected too.
Do you know how I could get it to work? When I use the driver's program and try to burn from there, it still goes back to my internal drive and not the external drive it was supposedly written for. o.0

Any thoughts???

Try a installing a free CD/DVD burning program like Deep Burner Free edition. Plug the external unit into the computer. Open deep Burner and choose the external DVD player from that software. An external DVD player requires no special drivers as Jon mentioned. Vista provides a default system driver for that purpose.

http://www.deepburner.com/?r=download

IS IT SHOWING in your device manager?

Can you not disconnect the internal drive to stop programs trying to use it? is this a laptop and hard to get at.