I found the following instructions with screen shots. Hopefully it will help you. There's also this link from Microsoft.
How do I install apps from an SD card? | Windows Phone How-to (United States)
Windows Phone: How To Transfer Your Apps & Games To SD Card
Let me get your basics clear about this first. Rather than browsing the app from windows app store inside your phone, we are trying to get the direct installation file from app store. We are then going to copy and paste that file (.XAP) in to your phone’s SD card.
After installing the microSD card back in to phone, we will install it on SD card itself, including the app’s cache. And we can save huge chunk of storage on your Windows Phone. Follow the following tutorial to save your internal storage on Windows Phone device like HTC 8S.
Step 1:
Start your browser, Go to this Web address
www.windowsphone.com, Press Enter!
Step 2:
Click on Apps+Games section on this webpage, so you can connect with the online Windows Phone Apps & Game Store. After moving on, you can search for your favorite game or app, that you wish to install on external storage.
Step 3:
Now, on your specific app page, like in this case is
Drag Race, don’t click on the Install Button yet. As we are not going to install it via store. Just scroll down the same webpage until you see –
Download and Install Manually on left sidebar. (Refer following screenshot)

Click that link and get the .XAP file downloaded on your PC.
Step 4:
Insert your microSD card in to your PC/Laptop, Copy that .XAP file and put your memory card back in to your Windows Phone.
Step 5:
Now go to App store in your HTC S, and click on SD Card option as you can see in following image. (If you can not see SD card option yet, better wait for 2-3 minutes.It will only appear once your card is successfully recognized by your smartphone and you have .XAP file copied on it correctly.)
Step 6:
Here you will the apps you have transferred via SD card. Select the app and click on
Install.
