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RAW (Sector-By-Sector) image backup of your Logical System Drive is easily restorable and finely workable on any USB device independently if it is as Fixed Disk or as Removable Drive. Logical System Drive of your Removable USB device will result easily encryptable too: all my tests have been done with TrueCrypt 6.0a, but it seems that also other encryption software are (and should be!) properly working under XP from a Logical Drive, furthermore all my tests have been done with already encrypted Logical System Drive (but it is not strictly needed).
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I found a way in order to install a full XP on a Logical Drive of any USB devices as Removable drives, with consequent both maximum compatibility BIOS/USB-drives and maximum freedom to choose about both your preferred file-system and your partition size, and furthermore with no preparation or pre-treatment of your Removable USB Flash Drive in order to make it bootable. Full (Generic) XP SP3-Slipstreamed on USB Removable (Encrypted) Logical Drive (EWF)
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