Installing Programs on a Flash Drive

yes. they are called portable applactions that do not need the windows registry to install. they can be found here http://portableapps.com/ . Also some apps by design are stand alone making them naturaly usable on usb.

you can install OS'es on usb flash drives. For some linux's here http://pendrivelinux.com/. You can get windows on a usb flash drive by some thing called BartPE. how to do it and its legality I do not know.

EDIT:
i pwnd PohTayToez(see below)
 
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