Install Android-x86 on USB drive
The solution is pretty simple, far more easier than I anticipated:


Partition your USB drive/SDCard, into two partitions, using this EaseUS Partition Master, which is what I used. 
Partition layout needs to be one with 1GB of space with FAT32 filesystem, that is for the installer.
Remaining partition of type ext3 (Linux partition).


The installer, when live-booting from the USB Drive/SDCard, will show the just-created partition on the USB/SDCard, just select that partition to install on it and its done.