Yeah...one license per install:
"Also, according to the Microsoft EULA for Windows XP/2003, a user may not simultaneously use more installations of these operating systems than the user has license(s) for. This also goes for BartPE. In practice this means that the user may not use, for instance, a single license installation on one computer while simultaneously using a BartPE installation (created using that license) on another computer."
Got that? If you use the same copy of Windows XP to install to the USB drive, then you can't simultaneously run your home computer and another from your USB drive simultaneously.
So, you pay for another Windows license to install it on a USB drive with software written by an unknown third party.
Sounds good to me.
Even aside from that, Microsoft disowns the Windows on any live CD, and will provide no support. There's also questionable legality even if you bought a separate license for your live CD. First, while the EULA allows a network server install to run on multiple workstations, it doesn't expressly allow the creation of a live CD. Second, creation of a live CD is an install, and I'm not sure if that complies with the 30-day pre-activation limit on the EULA.