Having an operating system on a USB stick, ready for use whenever needed, can indeed be beneficial. In this example, we’ll utilize Ubuntu, one of the most widely-adopted Linux-based operating systems.
Download the 32-bit flavor of the latest desktop version, at the time of writing it is 13.04. It can be used in 32- and 64-bit systems.
In order to put the ISO image correctly on the USB drive, for it to be bootable, etc., download Rufus for achieving that. At the time of writing, the version 1.3.2 is the latest available.
Once Rufus is running, the USB stick is selected from the Device list, select “MBR for BIOS and UEFI computers.” Since NTFS is supported in all modern systems today, it is the best choice between FAT32 and exFAT filesystems. In the format options, choose the Ubuntu ISO image, and in advanced options, make sure to check the “Add fixes for old BIOSes,” which will help with the older systems as suggested.
The USB stick can still be used for saving files as usual; it just has the Ubuntu system installed, thus extra care should be taken when adding or removing files. The whole space of the USB stick is used, which means that the ISO image is expanded to use all capacity available.