You can install windows xp on an external USB hard drive, but don't
expect to be able to easily move the drive from one machine to another.
It would definitely need to reconfigure all the hardware devices each
time you boot it up on a new machine - actually you will likely need to
do a repair install each time because it won't know how to handle the
new motherboard, video card, etc, etc.
Installing apps on it and running them on different machines likely
won't work either - if the application puts anything in the registry
(which is tied to the OS) it won't be installed on the USB drive, and
thus won't be around on the new machine. I imagine there are ways to
get around this, and some apps that would work, but probably more
trouble than its worth.
You're better off getting a laptop and carrying that back and forth!
>> Stay informed about: External USB Hard Drive