I want to operate an ATmega8L from an external crystal of 8MHz and I'm planning to change its fuse bits as follows:
- High fuse = 0XD9
- Low fuse = 0XFF
I just wanted to know if this is correct or not? Since I don't want to clock from the chip now.
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Your proposed fuse setting is correct.
It's the default setting, except that it changes from the internal RC oscillator to external crystal with maximum startup time.
Be sure that you have your crystal hardware set up properly, regarding correct capacitors and short track/wire length.
This page is a good resource to verify/preview fuse settings.