To install Windows 8.1 on a USB device you’ll need:
a) >10 GB of free storage space;
b) >7 GB on the target USB device;
c) Same or higher Windows version to that you want to install (General case);
0. Firstly, WIMBoot file (install.wim or install.esd) file is needed. It can be found in the Windows 8.1 disk image that is available legally for free on Microsoft’s website. Just search for “Create installation media for Windows 8.1” ,then find “Create media” button. Launch the downloaded utility. Choose a desirable version and mark “ISO file” like shown bellow.
Mount/Open/Unpack the downloaded ISO file. Install.esd file is located in the sources directory. (YourDiskImage\sources\install.esd). Copy it to any writable location (e.g your Desktop folder).
1. If you found install.ESD file, that’s just a compressed/encrypted version of WIM, download Converter. Unzip and open it. Press big “Open” button, mark ESD -> WIM, choose the image in the dropbox. (usually 1).2. Prepare the USB device. Open “Control Panel\Administrative tools\Computer Management\Disk Management”. Find your device. Create a PRIMARY, ACTIVE, formatted NTFS partition. (Caution! Any unconscious actions may damage/delete your data)3. The GImageX tool will be useful to install the previously obtained WIM file on the prepared USB device. Consider the image bellow as a example. Point on the file location at the first line and then, specify the drive letter of your USB device on second one. Choose image index. (Commonly it’s 1). Apply.4. Now, all is ready to copy boot records. The free version of EasyBCD utility will be helpful. Click on the “BCD Backup/Repair” button and choose a “Change boot drive” option. After it click on the “Perform action” button.
6. Change your primary boot device setting in BIOS and you’re done.