Sorry, I thought that I had replied to this a day or two ago.
The check box is only used to disable external linking, to link a product to external data you have to add it to your external datasource and refresh external links (F5), then providing you have checked the option called 'Link All Products to External Data if Available' they will automatically link to existing products with the same product reference. Products that do not match an existing products are put into the section called 'unallocated external products' and you then drag and drop them into the appropriate sections.
Regards
The check box is only used to disable external linking, to link a product to external data you have to add it to your external datasource and refresh external links (F5), then providing you have checked the option called 'Link All Products to External Data if Available' they will automatically link to existing products with the same product reference. Products that do not match an existing products are put into the section called 'unallocated external products' and you then drag and drop them into the appropriate sections.
Regards
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