Adding external JavaScript file to Magento

Put the JS file somewhere into the "js" folder, and in the XML layout you can include it with:

    <reference name="head">
        <action method="addJs"><script>folder/file.js</script></action>
    </reference>

Hope that helps.

Edit: You can also do it in your block:

    protected function _prepareLayout()
    {
        $this->getLayout()->getBlock('head')->addJs('path/from/js/folder/to/your/file.js');

        return parent::_prepareLayout();
    }

You can use Inchoo_Xternal extension. So you can do something like this:

<layout version="0.1.0">
    <default>
            <reference name="head">
                <action method="addItem"><type>external_css</type><name>http://developer.yahoo.com/yui/build/reset/reset.css</name><params/></action>
                <action method="addItem"><type>external_js</type><name>http://yui.yahooapis.com/2.8.2r1/build/yahoo-dom-event/yahoo-dom-event.js</name><params/></action>
                <action method="addExternalItem"><type>external_js</type><name>http://yui.yahooapis.com/2.8.2r1/build/imageloader/imageloader-min.js</name><params/></action>
                <action method="addExternalItem"><type>external_css</type><name>http://yui.yahooapis.com/2.8.2r1/build/fonts/fonts-min.css</name><params/></action>
            </reference>
    </default>
    <catalog_product_view>
        <reference name="head">
                <action method="removeItem"><type>external_css</type><name>http://developer.yahoo.com/yui/build/reset/reset.css</name><params/></action>
                <action method="removeItem"><type>external_js</type><name>http://yui.yahooapis.com/2.8.2r1/build/yahoo-dom-event/yahoo-dom-event.js</name><params/></action>
                <action method="removeExternalItem"><type>external_js</type><name>http://yui.yahooapis.com/2.8.2r1/build/imageloader/imageloader-min.js</name><params/></action>
                <action method="removeExternalItem"><type>external_css</type><name>http://yui.yahooapis.com/2.8.2r1/build/fonts/fonts-min.css</name><params/></action>
            </reference>
    </catalog_product_view>
</layout>

Here you can find more info about this.

To add an external JS without any problem use this:

<reference name="head">
   <block type="core/text" name="google.cdn.jquery">
      <action method="setText">
        <text>
           <![CDATA[<script type="text/javascript" src="https://ajax.googleapis.com/ajax/libs/jquery/1.7.1/jquery.min.js"></script><script type="text/javascript">jQuery.noConflict();</script>]]>
        </text>
      </action>
   </block>
</reference>