My choice of OS for this task has always been Puppy Linux. Its light and lightening fast. The latest incarnation is Precise Puppy and it has been getting some very good reviews. So I downloaded the ISO and burnt it to CD using xfburn on Xubuntu.
Once I booted up I got the usual text screens and then the screen went blank. I use an Acer 5732Z for my main machine these days and this has always been a problem using Ubuntu derivatives as it uses an Intel graphics chip. In Ubuntu this is usually solved by adding:
"quiet splash nomodeset"
to the grub. However, Puppy is slightly difference. At the boot up screen I has to press F2 and then type the following:
puppy pfix=ram i915.modeset=0
This allowed Puppy to boot into the normal gui. I then installed Puppy onto USB drive in the normal way.
Once its installed in your favourite text editor edit the syslinux.cfg file. Change
and the OS will boot fine with the GUI everytime on the Acer machine.