Since Subversion 1.6, external files are supported. More information about external files can be found here: http://tortoisesvn.net/docs/nightly/TortoiseSVN_en/tsvn-dug-externals.html#tsvn-dug-externals-files
Running "hg svn updateexternals" on an repository containing external files, //hgsubversion// tries to get the external content by running "svn co ..." which does not work for single files (see e.g. http://stackoverflow.com/questions/122107/checkout-one-file-from-subversion). This may be fixed by replacing the "svn co" command by "svn export" for external files since "svn export ..." does work for single files. Perhaps this export variant may be called as second try, if "svn co" fails. This would not break the current behaviour on external directories. Unfortunately it's not possible to detect if "svn co" failed because called with a file instead of a directory or because the provided url is invalid, in both cases error code 1 is returned. Parsing the stdout output is difficult due to native language support of svn.