If I run Google Chrome Portable, and I would happen to visit a website that had malicious code and "drive-by downloads", would the malware be saved outside the Google Chrome folder and execute on my PC?
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Pretty much, yes.
But remember, Chrome isn't I.E. I'm pretty sure chrome doesn't allow auto downloading without the user saying yes to it. So this would never happen.
You need to think about that for a second.
It's just Google Chrome made portable. It has every single little feature and default add-on that the regular comes with. So If a "drive-by" happens to download itself, Depending on what browser you're using, will depend on whether or not it downloads, executes or not. Hopefully that browser isn't just another IE in hiding.
So, If something were to "drive by", I would expect it to download itself somewhere onto the system and then screw stuff up. Isn't that what they do?
Na na na, come on!