If there exists no space nor time outside of the universe, one cannot assert that there is anything for the universe to be 'isolated from'?<quoted text>
Do you think the universe is a closed or open system?
An infinite universe may be open or closed, but we can never know which. Like infinity divide by infinity, the answer is indeterminate. For that matter, we can never prove whether the universe is finite or infinite. We can only postulate finite and infinite models and determine which model is the best fit to our observations.
There may be a universe beyond what we can ever detect, but our universe is somewhat more limited than that. Our universe consists of detectable matter, energy, space and time. We can only speculate about what lies beyond our universe. From unexplained phenomena in our universe, we may infer the existence of something else.
In thermodynamics, a closed system has no inputs or outputs of mass or energy. The space that we live in is expanding. Expansion of space increases the distance between galaxies, increasing the gravitational potential of our universe. So our universe has an input of unexplained "dark energy". Our universe is, therefore, an open system, and we may infer that dark energy comes from a greater universe outside of our universe.
The question remains whether dark energy brings with it entropy or exergy. Without an input of exergy, it seems inevitable that our universe will die after a few billion years. Perhaps it should have died already, if not for an input of exergy via dark energy.
If I'm not mistaken, which I could be, the 'open or closed' system discussion in regards to the universe usually refers to whether or not the universe has enough mass with the rate of expansion decreases and ultimately the universe begins coming back upon itself by gravity or not.
A consequence of the law of conservation of energy is that a perpetual motion machine of the first kind cannot exist. That is to say, no system without an external energy supply can deliver an unlimited amount of energy to its surroundings.
Keep in mind thermodynamics does not define a system. We define the system. Thermodynamics helps us predict the processes a system defined by us can undergo.