WY said:
I was reading on the conservation of momentum and they mention how in isolated systems momentum is always conserved and if the external forces of the system is zero.
That's right. By "isolated system" we mean a system that does not interact with the rest of the world. At best, an isolated system can only be approximated. And, isolated or not, if the net force on a system is zero, then its total momentum will not change.
In the case of friction or drag acting against the motion of a body would that be considered as part of the isolated system or an external force not equalling to zero? Would momentum for the body be conserved?
Whether friction is an internal or external force on a system depends on how you define your system. If whatever is creating the friction is
not part of your system, then momentum of the system is not conserved. For example: slide a block across a rough floor. If I take the block as my system, then it is not isolated (the floor exerts an external force on the block) and its momentum is not conserved. But, if I include the floor (and the rest of the Earth attached to it) as all being part of one giant system, then the momentum of that system is conserved (at least with respect to the friction between floor and block).
for example a boat at constant velocity is subjected to a drag force due to water resistance
If the boat is your system, then it is not isolated, since the water exerts a force on it. Of course, if the velocity is constant (in which case another force must be acting to cancel the drag; for example: the motor is running or wind is in the sails) then by definition the momentum is constant.
What is usually of interest is what happens when things interact. Let's say two objects collide. If you can ignore outside influences for the brief duration of the collision, then one can say that the total momentum of the system composed of both objects is conserved during the collision. (Since the only forces are those they exert on each other.) This is a very useful physical principle with many applications.