Using an external battery with Canon 580 EX ii

I bought an external battery pack a while ago to use with my Canon Speedlight 580 EX ii. I was unaware that you have to set the Flash Custom Functions for an external battery pack. Needless to say it burned out my flash and I had to have it repaired (Luckily it was under warranty still).

I am now wondering what is the proper way to use an external battery pack with this flash. On my camera (Canon 5D Mark ii) it has 2 custom function setting for external power. One says Flash and external power and the other just says external power source. I'm pretty sure the first one is the default setting so I would assume I would need to be using the other. Also, I was told by the Canon rep that I can't use ETTL with an external power source and that I can only use the flash in Manual mode. Is this true?