Install Linux on a USB disk with SUSE Studio
To install Linux on a USB disk using SUSE Studio go to www.susestudio.com. Choose your favorite SUSE, add packages as you like. Tell the web site to build a USB stick from it. Download the image and put it onto your USB stick.
For example, if your USB stick is /dev/sdh, use something like
dd if=usbstick.i686-0.0.1.raw of=/dev/sdh