You can make a USB bootable linux by installing a bootloader in the USB drive and the setting the configuration files to load proper kernel and initrd images, and parameters.
You can follow this guide, this might help you:
http://phoxis.wordpress.com/2009/09/...boot_cddvdusb/
In short install syslinux in USB as
cp /path_to/vesamenu.c32 /path/to/syslinux/dir/of/usb
cp /path_to/isolinux.bin /path/to/syslinux/dir/of/usb/syslinux.bin
syslinux -sd /path/to/syslinux/dir/of/usb /dev/sdXy
where /dev/sdXy is the partition where you are keeping the OS. Run syslinux as superuser
and make a config file syslinux.cfg
LABEL osname_label_for_text
MENU LABEL OS Label Shown in Manu
KERNEL /path/to/kernel/in/usb/kernel.bin kernelparameters
APPEND initrd=/path/to/initrd/in/usb/initrd.img
check the OS documentation for details with kernel parameters, and you need to check syslinux info page.
Or you can also use GRUB.