What you're looking for is a good shotgun mic. That in itself is a
generic term that means any long barreled mic. You want a good
condenser (externally powered) mic with a lobar pick up pattern
to put on your boom pole. Lobar pick up means the mic focuses its
audio pick up to a narrow area. This is why you want to use a boom
pole to get the mic as close the the actor as possible - you'll
get clean dialogue tracks with less ambient noise.

?URL? http://www.sennheiserusa.com/newsite/?/URL?
Sennheiser is the mic most used by professional sound recordists.
They are expensive and worth it. Check out the ME-66 and the ME-
67. The MKH60 is the best if you can afford it.

?url? http://www.audio-technica.com/?/url?
Audio-Technica is cheaper. Check out the AT835B. It's a workable
mic, a little muddy and not as directional as it should be. The
AT835ST is a good mic for the price, but it, too, sounds a bit
muddy - the vocals don't sound crisp enough for me.

?url? http://www.rodemic.com/microphones.php?/url?
Rode mics are quite good. Check the NTG (shotgun) series.

?url? http://www.azdencorp.com/?/url?
I've never used Azden mics. Theyre inexpensive and I dont hear
too many good things about them, but if that's all you can afford
it's MUCH better than using the camera mic.

A good mic is an investment. It will last longer than your camera
- why skimp?

The further away the mic is from the actors, the higher the volume
needs to be. The higher the volume, the more noise you get. Your
goal is to have a very high signal to noise ratio - more signal
(the dialogue) less noise (the background). Even a very good,
expensive Sennheiser mounted on the camera will pick up a lot of
background ambiance because its far away from the actors.

So you need a boom pole. This can be as simple as a painters pole
with a microphone shock mount on it - or a 3 or 4 section,
expandable Carbon Fiber, Graphite Fiber or Aluminum boom pole. The
lighter the pole the better. Expandable is also very convenient. A
pole thats a fixed six or eight feet (painters pole) can pose
problems if youre shooting in a small space like a bathroom or
small apartment or if the boom operator needs to be twelve to
fifteen feet away to be out the the lights.

A good Graphite, five section boom will be light, range from two
feet to nine feet and cost $500 or so. A pro boom-op will invest
in a good pole. No need to spend that kind of money if youre
making one or two shorts a year.

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The aim of an argument or discussion should not be victory, but progress.
Joseph Joubert, essayist (1754-1824)

by externally powered, is the mic picking up and recording on a seperate track than the video, or is the audio saved with the video.

By "externally powered" I mean a microphone that is powered
by an external source - a source other than the batteries in the
mic.

If you plug any mic into your cameras audio input, the audio
will be recorded to the tape in the camera (or hard drive or card).
If you plug any mic into a separate recording device the audio will
be recorded to that device and not to the camera.