I had to totally uninstall Steam, then create a directory on my external drive as in
/Volumes/DriveName/Application Support/Steam/, install Steam, use the
ln -s command for the newly created directory and the
~/Library/Application Support/Steam/ folder on my main drive, delete the original
Steam folder on my main drive, and then I fired up Steam and it worked. I knew because I went to download Civ 5 and the available drive space referred to my external drive.
By the way, a little alias
Steam folder pops up within the original
Application Support, so superficially the process will look like it has produced an alias.
I'm a total Unix n00b, so the whole experience was horrible and took me 2 hours to figure out. Fix it, Steam developers. That's two hours I'll never get back.