Xbox One troubles

While writing out a more detailed description of the behavior, I stumbled upon the solution myself.

When you try to install the game over the internet, just let it start, and then cancel it. This will both remove the installation and download from the queue, but apparently also remove the knowledge of the installation from the Xbox One.

So:

1. Start the online install
2. Cancel it
3. Return to the home screen
4. Notice that the disc tile has now changed to "Install disc"
5. Activate the disc tile to start the installation from the disc.

This worked, the game now installs from the disc. Obviously any downloaded DLC's will still need to be downloaded, but for the purpose of this question this is not relevant.

Now, what do you do when you get back home and want to plug in the external drive?

Here's what I did. I first uninstalled the game using the storage management.

This makes my Xbox One forget that I had the game installed. Make sure you don't delete any savegames you have on the console.

Then, you turn off the Xbox One, plug in the external drive, and turn it back on.

Once you do that, the disc tile still says "Install disc". Ignore that. Instead either use your pinned link to the game, the tile for the game (if it shows up on the home screen), or navigate to your games and apps list and activate it. You should get a message saying not to unplug the external drive, and that your game will be ready soon.

A few seconds later you can try again and the game should now start.

Finally managed to fix this. So posting a solution in case anyone else has the same symptoms. There are two hidden settings that (according to Xbox support) can cause the issues I had been facing. I should note that I had Factory reset the night before trying this, so if it doesn't work first time, a reset may be required also. But all my game saves had been backed up to the cloud, so the only annoying part was game and app re-installation.

Clear Persistent Storage

Go to Settings -> Disc & Blu-ray -> Persistent Storage and hit "Clear Persistent Storage" - This is apparently a non-recyclable "temp" area for the OS. I'm guessing that its public writable, which would mean that there may well be various lock files in there that could get corrupted, thus cause issues.

Clear Alternate Mac Address

Not sure why this one would help, but I actioned the two tips combined, so placing here for completeness. Go to Settings -> Network -> Advanced Settings -> Alternate Mac Address -> Clear. (This may well force a restart)

Cycle Power

Cold reboot. Hold the power button down (on the system) for around 10 seconds. Then unplug EVERYTHING! Leave for around a minute. Then reboot with all your devices and peripherals as normal.

I was able to reboot just using the X button on a controller and it all came back to life. I'm very happy!