POCEH,
sorry for the long delay in reporting back. The sanbarrow site you mention is full of good info, thank you for that informative link. But I solved my problem accidentally.
I shutdown WS 8 after connecting the external drive and setting it offline with diskpart.
When I restarted WS 8 it recognized the physical drive and made it available in the dropdown. Apparently the drive has to be available to be discovered by starting WS 8 fresh, it is not discovered by a running instance.
I can't believe it took so long for me to realize this! Problem solved now, and I was able to successfully go on and have vdiskmanager to image the physical drive.