Typically live cd or live DVD spins do better with unetbootin. If you want a true bootable bona fide system, insert the USB thumb drive or external drive. Use a traditional full featured DVD and select the USB for installing your main and boot partition. If you're paranoid, remove your hard drive to avoid any mixup. That should not be necessary, however.
Just pretend your computer has more then one drive and you want Linux on the smaller of the two.
In bios, set the USB to boot first before the main drive does. If you do a traditional install on a thumb drive, it may only run on the particular machine used to build it. The live editions have no such issue, but changes aren't saved.
I have booted fedora externally with a USB. It is stable, but sluggish. I'd suggest one of the light weight desktops, probably lxde.
Last edited by mdlinuxwolf; 12-03-2013 at 12:47 AM.