I was deployed over seas and the only income I made was my military salary does that apply to making money outside the u.s or do they mean from external sources?
You are correct, that only applies to $$ from actual foreign sources while living overseas.
Your military W-2 is just treated as-if earned in the US.
IF deployment was in an actual combat zone, then your box 1 would be reduced by (at least) your combat pay that would be in box 12 of the W-2 with a code Q.....but there can be a few other things that reduce box 1 too. TTX handles them, you just enter your W-2 in the software with all the boxes you see on the paper form.