Has anyone found a distribution that will install on a USB drive?....
Slackware 10.0 appears to do it, though I have not tried it myself. From the ChangeLog.txt:
"isolinux/initrd.img, rootdisks/install.*: Added support for installing from USB or IEEE1394 CD/DVD drives. Fixed full installation size estimate (thanks to Karl Magnus and Erik Jan Tromp). Set HOME=/root for install.Fixed install support for bareacpi.i."
There are other references as well. You could check in the Freenode "slackware" IRC channel to ask for sure.
Slackware-10.0 Release Announcement:
http://www.slackware.com/announce/10.0.php
Slackware iso mirrors:
http://alphageek.dyndns.org/linux/slackware-mirrors.shtml
Slackware BitTorrent list:
http://www.slackware.com/torrents/index.html
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