Re:- Outside cylinders, Two main reasons,
1) Access, Inside cylinders are by definition placed between the frames of the loco and are therefore often, at best, difficult to perform even routine maintenance on.
2) Size, The distance between the frames of a loco are determined by the gauge of the track on which it runs and squeezing, say a three cylinder compound assembly into this space has excercised the minds and patience of many engineers over the past two hundred years. This led to the adoption of placing the high pressure cylinder/s inside the frames and the low pressure cylinders (which are much larger in diameter) outside where space constraints are dictated by the loading gauge of the railway concerned.