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Run Windows XP from a USB Key
Saw this site from a forum, which includes a guide on how to Windows XP directly from your USB key!
All it takes is a minor error in the Windows Registry or a virus infection, and your operating system can become unbootable. But with a properly configured USB flash drive on hand, you’ll always have a compatible replacement no further away than your pocket or keychain. In addition, the flash drive can also provide a secure browser and virus scanner, and lets you take your favorite DVD burning and Office software with you wherever you may go.
All that’s needed is a bootable USB Flash drive with at least 256 MB of storage capacity and a Windows Setup CD. Using the program Bart PE Builder (Freeware), you can install Windows XP on the flash drive, along with other software as needed (and as available space permits).
Well, I haven’t try that and I don’t know whether it’ll really work or not…I’ll leave it to the computer experts out there to do the testing. Do post a comment here when you’ve attempted this. And good luck 
Source: Tom’s Hardware Guide
