Can a usb device installed portableapps system be the booted usb device?
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on how you partition it. If the USB device is formated via FAT or FAT-32 (most Linux Live USB installs as well as BartPE), you can install PA on it without any problems. If it is formatted via ext2 or ext3 (most Linux systems), then you cannot install Windows PA on it because Windows does not recognize ext2.
If you didn't understand anything I said just now, then the answer is probably yes.