I need webform submission data to be inserted into an external sql database. How would I go about doing this? Would this be a custom module, or be processed in template.php? I am having trouble understanding how I can capture that data and have it sent over to an external database.
Usually the first step to solving a problem like this in Drupal is finding the right hook.
A quick google search for "webform hooks", and then we pick the hook where we'd have access to the completed webform's data: http://api.lullabot.com/hook_webform_submission_insert/7
The example on that page happens to be exactly what you want to do!