I would like to dual boot my windows 8.1 installation with windows vista. Is it possible to do it, with 8.1 installed first? Just want to know how

You could always try on a virtual machine, before trying on a physical machine.

Install Windows Vista first, then install Windows 8.1. At last you will get a Windows Boot Manager Screen with both Vista and 8.1 option when you are booting your system.

I'll try it in VMWare but it might be different since my laptop is UEFI and VMWare uses BIOS. I'm going to install 8.1 first and run the vista installer FROM 8.1. The virtual machine will use 4GB ram and 60GB storage

It is entirely possible because they use the same boot loader known as BOOTMGR.

Since vista was the first to use BOOTMGR, (xp and older used NTLDR) I'm gonna try it on my laptop and not on a VM this time and run the vista installer from 8.1 and see if it works

The first phase went pretty well and i entered my product key in, but after the first restart it listed itself in windows boot manager as "windows setup" , and when i boot into it, it blue screens and gives me error 0x0000001E. When i booted back into windows 8.1, it has a message saying it reverted my laptop back to normal, however it still lists itself in windows boot manager.

Try booting from the Vista DVD and installing this way.

When i try to boot from it and install it onto the vista partition it says, "Windows Setup is unable to locate a valid hard drive to store temporary installation files."

I already had the vista bootloader

Go into diskmgmt.msc and look at the infobox next to the big bar for your hard disk. If it says GPT, iirc you can’t install Vista/7 on it.

What infobox, i'm confused

You wouldn't be able to install Windows 8.1 in the first place, if you had your firmware type and partition table type mismatched.

It could problems like chipset modes or Secure Boot being on. Windows Vista does support EFI out-of-the-box if I'm not mistaken. When I was installing Windows 7 after 8.1, I remembered that I need to temporarily switch from AHCI to ATA modes. After Windows 7 was installed, I applied a registry tweak and gotten Windows 7 working with EFI and default AHCI. Try turning off AHCI if you can then turn it back on after applying the same tweak.

Don't do this.

Always install the older version of Windows first, then the newer one.
Make sure you completely format the disc completely first. Use GPT if booting in EFI mode, or MBR if in BIOS mode. It's possible 8 is doing something to the file system that Vista setup doesn't like, or your computer is in an unsupported configuration for vista.

Windows Vista and 7 can read, write, and boot to GPT discs in EFI mode:
https://docs.microsoft.com/en-us/previous-versions/windows/hardware/design/dn640535(v=vs.85)?redirectedfrom=MSDN#can-windows-7-windows-vista-and-windows-server-2008-read-write-and-boot-from-gpt-disks

If you can't get dual boot to work, you can always install them on separate storage devices and swap between them using the BIOS startup menu.

You don’t need to install the older OS first unless they use different bootloaders. If he was going to install Windows XP on his laptop, then yeah installing the older OS first would work better.

I'm too scared to format my hard drive (even though i backed up i still don't want to have a new start, i've already formatted my hdd multiple times and i know how it feels). I'm still using windows 8.1 and want to dual boot vista since it's the best windows os IMO. I don't want to use a virtual machine or a vista transformation pack, just pure 8.1 and vista on my laptop, and i don't want to use vista as my main os since it already ended support. I know vista gets a lot of hate but it's the prettiest version of windows so far and it's unlikely there will be an even prettier windows version (since skeuomorphism is basically dead in os guis nowadays) and the service packs made it more stable.

Ended up installing to an external HDD.

External HDD? There’s no way to install Windows onto an external drive. You could have partitioned the drive to install Vista on the free space you would have made.

Sounds good, glad you found something that works.
If you still wanted to try and get it dual-booted, do you know whether you are booting in UEFI or BIOS mode? Are you installing on a GPT or MBR disk? Is secure boot enabled? Are you starting the install from external media or from within Windows?

Not necessarly. Some usb hard drives work with no modifications, others need only minor changes.

That's what he was trying to do. Please read the thread!

Sometimes it is impossible to partition the boot drive after windows is installed on it and you are running that version of Windows.. You could try going into Vista, loading Disk Management, partitioning the internal drive, and installing Vista on your second partition.