How-to install windows to an external USB drive

Part of the ongoing saga with my backup solution (see earlier posts today) was a seemingly fantasic way of ensuring that out on the road, should my laptop hard-disk fail, I'd still be able to continue working. The theory was simple. Install a base copy of Windows (either XP or Server - both would do as a backup) with a minimal installation of the essentials such as Outlook, Powerpoint, Virtual Server, Virtual PC etc. On a second partition or a DVD, make sure you have a copy of the virtual machines and whatever before setting out. If the main disk fails, it should be a simple case of performing a USB 2.0 boot (I have a BIOS which supports it and has been flashed to the latest level) to the external disk.

However, I got unstuck on installation. Both Server and XP get through the first text install and goes into the first graphical boot before consistently "BSOD"ing. I'm intrigued to find out if my theory is indeed possible, or whether it's most likely a hardware problem. Hence, if you've managed to do an install to an external USB disk, please let me know especially if there's trick to share - hours of searching the Internet didn't reveal anything. Fortunately though, I do have an alternative which does work, if a little extreme. Since one of my external disks houses a standard laptop hard-disk, by simply packing a small screwdriver, the disk can be popped into the laptop as a direct replacement. Of course, I've already set it up with a bootable partition ready to run....