Quote - --- Is there a setting in poser that keeps the external refrence to the geometry while it makes the pp2 file?

It makes it easier to update the OBJ.
The main reason though is that it allows Poser to reuse the geometry for multiple copies of the prop in the scene.

Quote - --- Or do I have to do it manually in txt?

You have to do it manually

Quote - --- Is there some kind of draw back to having the data embeded in the pp2 file?

No particular drawback, but as I said originally, external geometry is preferred (some store insist on it being used for props etc.)

Quote - --- Why make the extra steps to refrence?

--- Would I do the same structure as in a cr2 file by adding geomCustom 13 string? Do you have a link were I could learn to externalize the geo from a prop?

This is straight forward, cut and paste the geometry into a new file, then change the extension to OBJ.
You then need to refer to that file in the PP2.
See -> http://artzone.daz3d.com/wiki/doku.php/pub/tutorials/poser/poser-misc42