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The influence of nonlinear dynamics on the linewidth, spectral behavior, and stability properties for a semiconductor laser in an external cavity is examined by numerical simulation of the noise-driven rate equations. Experimental results on the feedback-induced linewidth reduction are presented. The saturation of linewidth reduction and the sudden increase in linewidth which is observed at high feedback levels are shown to be contained in the theoretical model. The state with strongly increased linewidth has the signature of a chaotic state. We present examples of the calculated time evolution of the complex field amplitude and the associated FM noise spectra and field power spectra. The examples illustrate the transition to the chaotic state and focus on the spectral characteristics of the state.