What does 'Not percipient of form internally' in Salayatana Sutta mean? In the Salayatana Sutta in the last paragraph it says;


  Not percipient of form internally, he/she sees forms externally. This is the second direction.


What does this mean? Does it mean you do not react? OR Is related to reification, like look at things and don't try to make sense of them?
Your quote from MN137 appears in several suttas. It is significant:


  ajjhattaṃ arūpasaññī bahiddhā rūpāni passati


The word ajjhattaṃ has a connontation of self, of identity view. In other words, there is a personal relationship to the seen, the heard, etc. In this way, it is very much like "My Precious" from the Lord of the Rings. There is a sense of possession in the internal form. There is the taint of identity.

The word rūpāni has a connotation of non-identity, of simple recognition of form, that which is seen, heard, etc., but without personal identification. One sees a stranger's wedding ring, one sees the wealth embodied in the ring, one sees the proclamation of wealth in a ring, one sees the promises bound into the ring, one sees the hope bound into the ring, one sees the suffering bound into the ring.

The liberations are an important progression of awareness. Suffering, one perceives the world in terms of craving. With each step of liberation, one sees beyond oneself. One sees more of the world as it is and relinquishes identity view.

Seeing things externally, just see them for what they are, not for what they are to you.