There are plenty of Operating Systems that are portable out there now. Mostly non-Windows. Because Windows is tougher and may not be free (ie. MyPocketXP).
So here I will only focus on other OS.
Slax seems to be a very good candidate. Thanks to LifeHacker.
This will help me to teach SeonWoo who's laptop is a bit problematic loading in normal mode. All he needs now is just a usb drive.