Differentiate between internal memory from external memory?

You don't say what you are talking about, so I have to assume you mean computers. In a computer we only speak of memory when the processor can access it directly with an address for the data. Anything else is defined by software. A drive is defined by the requirement to transfer data in a block of a certain size. It is named by a letter and a colon. A device is defined by the requirement to transfer data one byte at a time. It is named the same as a file.