When Microchip refer to an internal oscillator they mean one with no external parts. To avoid confusion when referring to any other oscillator rather than the internal RC one they refer to it by name, IE Crystal, external RC etc. The internal RC oscillator on the 2550 can be switched between 8 different frequencies between 32k and 8MHz. However, if you are going to use the USB capabilities you must you a crystal or resonator. See the diagram in the data sheet.
Mike.