OS

Damn small linux is portable. There are a few other portable distro's, but dsl seems to be the most popular.

--
create your own personal wiki

And with Qemu for windows, you can run pretty much every live-os in windows.

A great small/light distribution of linux that loads to ram 24mb-commandline 48 to 70-standard 87mb-full iso prepackaged in the qemu x86 emulator.
To download qemu-puppy from source forge go here: https://sourceforge.net/project/showfiles.php?group_id=160696
To get the latest puppy linux iso go to:
http://www.puppylinux.org/user/downloads.php?cat_id=1
As of 12/5/06 a puppy 2.01 .iso is included in the qemu-puppy package but since the new version of puppy always includes better features I recomend that you copy the latest .iso to the qemu-puppy folder and rename the iso with the same name as the old one(easier) or look for the iso path in the config file and change it there (recomended so you don't have to write down which iso you have installed).Please note that a new version of puppy linux is usually realeased every 4-6 weeks.
To acess the internet set up a network.
To acess your usb drive and save initial os configuration you may have to click the safely disconnect icon on the taskbar then stop drive or alter paths in the config file otherwize you may have to setup puppy at each boot. I had to do this since I only have one hard drive partition which has XP on it and puppy won't write to an NTFS partion that is "dirty" meaning windows hasn't shut down properly or is currently running.The later versions of Puppy CAN write to NTFS but only if the partition isn't "dirty".

@njaws07

"I wonder if they will make a linux portable"
--------------------------------------------------------------------

I wonder if you've ever been here - er, "your wish is my command!":

http://distrowatch.com

Tons of Linuces, a hefty # of which come in a tasty "Live CD" flavor - which are of course, portable...