I am looking for resources to learn how to put linux on usb devices. I have a Zune 30G that I'm itch'n to try and break into but I have no idea where to start.
I also have a Sandisk clip 2Gb that I can practice on, before tackling something that no one has been able to so far.

I'm not sure from your post what you want to do. Installing Linux to an external USB hard drive?? is as simple as installing to an internal hard drive. You just need to know which drive is which so you don't overwrite an internal drive.

If you are talking about installing to a Flash drive, different distributions have their own software for the purpose. You can also download and use unetbootin to do it or use pendrive linux. You didn't indicate which Linux you are using?

If I do understand you right, you want to replace Microsoft's firmware with Linux. I don't know if the license allows this, but I would assume that at least in some countries it is illegal to do so. So I don't think you will get advices here.

The Zune has a chipset that no one has yet been able to install linux on yet. I'm looking to learn how to investigate things like this. Do i have to open it up? Is there a way to look into the device through software?
As for it being illegal... I'm not sure about that. I don't remember any user agreement when I turned on the device for the first time. And there is a legal section in the about on the device and it says "This product is protected by US and international copyright laws."
I'm not really sure why it matters, but my Distro is Ubuntu 10.04.

If Linux is simply replacing Microsoft's firmware, wouldn't that be the same as buying a PC, and replacing Windows with Linux? Using Linux to modify the firmware would probably be where licensing issues would start.

At first, I was thinking the OP wants to put Linux along side the firmware, so the Zune will still have it's firmware, but will be able to boot Linux on a PC when connected. Or does the OP want to boot Linux on the Zune itself like iPodLinux?

I want to boot Linux on the Zune. The thing is it has WiFi capabilities but it completely under utilizes them. I would like to be able to connect to the Internet with a web browser on the Zune, and the only way I see that, that would be possible would be if I install Linux or some other Os on it.