[TriLUG] Portable Linux (Bootable USB Flash Drive) Creation?

[Scott Thomas]

Can someone point me in the right direction on creation of a bootable USB flash drive Linux distro? I've used the Fedora USB creation software, and LiLi and LiveUSB Creator, but they use the LiveCD versions of the distros, so when you boot the flash drive, it 'thinks' it's running from a liveCD, so you can't install software, etc. I want a distro I can install to a usb flash drive, drop in my pocket, and use it anywhere I go, being able to save files, install software, etc. 
 
Am I asking too much?
 
Scott