You could install your OS on a Compact Flash (CF) card, which has certain advantages over a hard drive. CF cards...
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are faster, use less power, produce less heat and have no moving parts because they are solid-state devices. They also have a wider operating temperature range than disk drives, which can fail from vibration, heat, cold or shock. They are also more tolerant of power failures during write cycles than a standard hard drive. However, a power failure during write operations can corrupt a boot sector or File Allocation Tables used in the FAT file system.
It's important to note that CF cards only support a limited number of writes and over time it will fail. This limits your ability to use it like a regular hard disk with an operating system installed on it. For example, if you located the Windows swap file on it or enabled logging for all events, you would eventually wear out the card. There is a version of Windows XP called XPe (embedded), which enables you to reduce the number of writes XP makes to the card. You can download XPe SP2 from http://msdn.microsoft.com/embedded/windowsxpembedded/default.aspx.
You may be interested in SiliconSystems' PowerArmor technology (www.semiconductorstore.com/Pages/Products/SiliconSystems.htm) used in its solid-state storage products to eliminate drive corruption in the event of a less than graceful power-down, though they are aimed at the high system end of the communications, military, and medical markets.
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