Strictly speaking, inline code is code that is embedded into the page in some enclosing <SCRIPT></SCRIPT> tags. However, some code can be included from an external file using the SRC attribute. This code is not inline code because it no longer lives in the page. However, when the page is loaded, it executed inline as if it had been part of the page all the time.

You may find yourself arguing over the fine points of whether included code is in-line code, but to the browser it simply does not matter.

Cross-references:

Wrox Instant JavaScript - page - 43