Reference: OS X Backup On USB Drive

Creating OS X Leopard Install on a USB Drive or iPod
— see Comments for problems

See this thread for relation to MSI Wind:
Another easy method to boot the custom disk from USB

That looks very pretty and very tempting. But would I like it? That is, would it be speedy enough not to drive me up the wall? Techies are too often impressed simply by being able to do something. My agenda is different: I want to get work done!

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