"In order to use the vst~ external PD must be started with a -lib setting pointing to the vst.dll. For example -lib \pd\vst\vst would point to......"

Well, how does one start PD with a lib setting?

As a matter of fact, how do I operate externals at all?

Externals live in some directory somewhere you choose, and inside Pd you can set the "paths" to go find them each time it's run. That's under File->Paths. After you type in the place your externs live don't forget to save the new paths before you restart Pd.

You can specify "options" like -lib on the command line that starts Pd. If you are launching it from a Windows desktop shortcut, edit the command that the shortcut executes and add the -lib part there.