The location of the catalog and its cache can be anywhere you choose. The location(s) of the image files is separate and independent of the catalog location. The path name of the images files is stored in the catalog. If the drive letter or device name to the image files changes, you just need to use the LrC "find missing folder" process to relocate the top-most folder on the new drive.
When upgrading from an older major version to a newer major version, the old catalog usually needs to be updated to support the new features. This will happen when you try to open the old catalog in the new software. LrC will create a new catalog of the new format then migrate your data from the old catalog to the new catalog. The old catalog is not changed during this process.
The default location of this new catalog is the same folder the old catalog is in. If you prefer the new catalog to be somewhere else, you can use the OS file tools (Windows File Explorer or Mac Finder) to transfer the new catalog and its supporting folders to another location of your choosing.
Things to consider: - LrC will create a preview cache of the image files, thus the images on the external drive will not be read many times. This allows a slower drive to not be a big problem. - Ideally the catalog and image files should be on separate drives for performance reasons, if you have enough drives available. - Ideally, the catalog should not be on the system drive due to the space it takes up. - This is a must: the catalog and its backups need to be on different drives. Otherwise, a single drive failure takes the catalog and its backups with it.
- LrC does not backup your image files. You need to do this separately.