Just made a cool clip (below) that I'm going to follow up by getting DSL (Damn Small Linux) running on QEMU, an emulator for running virtual machines. I want this cos there are some nice Bluetooth security apps only available for Linux.
If you want to run a full-fledged Linux desktop from your USB key, look no further than Damn Small Linux (DSL). This slim Linux distribution fits on a 128MB USB key, and it contains all the applications you are likely to need on the move.
Better yet, Damn Small Linux is available with the QEMU emulator, which allows you to run DSL from within Windows. Download the file dsl-embedded.zip from one of Damn Small Linux's mirrors, unzip the file, and launch QEMU by double-clicking on the dsl-windows.bat file. Admittedly, running DSL using QEMU is a painfully slow affair, but it does allow you to run Linux without leaving Windows and rebooting the computer.