Now this article over at tomshardware.com comes in handy. I told you yesterday how to encrypt your hard drives with the great true crypt freeware and recommended that everything would be encrypted and the system would be booted from usb.
The article gives a 14 pages tutorial on how to create bootable windows operating system on a 256 MB usb stick. You can of course use a bigger one and add more utilities that you need (like true crypt for example). Everything is well explained, you should not encounter lots of problems.
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