OK, I'm running El Capitan OS X 10.11. The Apple app "Disk Utility" is useless to create encryption, as it typically returns
Operation Failed with status 28
So the fix is to use a little terminal magic. After adding your USB drive to the Mac, run terminal
At the command-line prompt, enter:
diskutil list
You will see your main (internal) disk listed, as well as your USB:
/dev/disk0 (internal, physical):
#: TYPE NAME SIZE IDENTIFIER
0: GUID_partition_scheme *500.3 GB disk0
1: EFI EFI 209.7 MB disk0s1
2: Apple_CoreStorage Macintosh HD 499.4 GB disk0s2
3: Apple_Boot Recovery HD 650.1 MB disk0s3
/dev/disk1 (internal, virtual):
#: TYPE NAME SIZE IDENTIFIER
0: Apple_HFS Macintosh HD +499.1 GB disk1
Logical Volume on disk0s2
B0B7A5AA-7D8D-41E3-8565-82E4E1D685D5
Unlocked Encrypted
/dev/disk2 (external, physical):
#: TYPE NAME SIZE IDENTIFIER
0: FDisk_partition_scheme *31.5 GB disk2
1: Windows_FAT_32 KINGSTON 31.5 GB disk2s1
You can spot your external drive by its size -- mine is 32 GB, which, after overhead is around 31.5. In other words, its name is KINGSTON at drive identifier disk2s1.
Now, using your USB drive's device identifier in place of disk2s1, pick a suitable name for your new drive. I like thing2:
diskutil eraseDisk JHFS+ thing2 /dev/disk2
About 30 seconds of progress later, you should get:
Finished erase on disk2
Now, open a Finder window, and right click your newly named disk. Pick the option encrypt . In my case, the USB 3.0 encryption took about 12 minutes of effort for 32 GB (45MB/s write). You will know you are done, when the drive activity light goes out.
You can unlock the disk while booted from other partitions. You'll be prompted for a password when mounting the disk. You can choose to save the password in your keychain if you prefer.
Also, you can just right-click on the volume in the Finder and select Encrypt "Disk Name", it's the same as using Disk Utility.
Best Answer
Assuming that you don't have an additional thumb drive (according to Apple with at least 12 GB - I got it to work with a 8 GB thumb drive) I recommend the following method:
erase and repartition your WD easystore to two Mac OS Extended (Journaled) partitions - a bigger one first with the name "Sierra" and the size (total_size_of_external_drive - 12 GB) and a much smaller second one with the name "Sierra_Installer" and a size of ~12 GB. The partition scheme has to be GUID! If your MacBook's main partition already has the name "Sierra" choose another name for the first partition of the external drive. Below I assume the bigger volume on the external drive has the name "Sierra".
Example: if your external drive has a size of 1 TB, then the first partition "Sierra" should have a size of 988 GB and the second "Sierra_Installer" partition one of ~12 GB.
enter the command:
hit the Enter key, enter your password (which won't be visible because it's masked), hit the Enter key again and let do createinstallmedia its job.
The method proposed by user3439894 in a comment to your question is preferred though: create an Installer Thumb Drive, boot to it and install Sierra to a single-partitioned external drive.