I have installed 8.10 to a small (2) thumb drive and it works great. I have a persistent install, that saves changes and runs all the software. It was so easy.............I went to System/Administration/Create USB startup disk and created the little sucker. I boot on my laptop by pressing F12 at start up and picking the USB drive from the list. If I want to boot in XP, just boot up as usual. Sorry, don't know what to do if F12 doesn't create a boot order listing.
I followed the short instructions on Pendrivelinux and it worked.