Jtdcftul

Yes, you can partition a USB flash drive to boot into a Ubuntu Live Session and use it as a regular USB drive (accessable to windows) on separate partitions. I was able to do this with a 32GB PNY USB 2.0 flash drive on a Sony Vaio T Series Ultrabook laptop with UEFI and Windows 8.0 installed. I also tested this from Ubuntu server 12.04 on my 16TB RAID5 i7-290 server.

I partitioned the USB flash drive using GParted in this configuration:

sdh1 is the "Storage" partition that's accessible from Windows. sdh2 is the Ubuntu desktop 12.04 boot-able partition. These were my steps:

 1. Created a new 10 GB, ntfs, logical partition, with 25 MB Free space preceding 
    and 0 MB following, labeled Storage (must be first on the drive)

 2. Created a new 5 GB, fat32, logical partition, with 0 MB preceding and following

 3. Set a boot flag for the second partition

 4. (Created the other partitions which are not needed)

 5. Booted to a Ubuntu Live Session loaded on a DVD and selected Try Ubuntu 
    without installing from the GRUB menu

 6. Opened Startup Disk Creator with the USB flash drive pluged-in

 7. The Ubuntu-Desktop 12.04 Image and pny USB 2.0 flash drive (/dev/sdh2) 5.0 GB 
    partition were already selected, moved the How much slide to store documents 
    and settings in reserved extra space and selected Make Startup Disk

Without selecting the boot flag, the Startup Disk Creator would only recognize the entire flash drive as /dev/sdh, instead of the desired second partition /dev/sdh2.

Without putting the Windows partition first, the Removable Media Bit...

"The removable media device setting is a flag contained within the SCSI Inquiry Data 
response to the SCSI Inquiry command. Bit 7 of byte 1 (indexed from 0) is the 
Removable Media Bit (RMB). An RMB set to zero indicates that the device is not a
removable media device. An RMB of one indicates that the device is a removable 
media device. Drivers obtain this information by using the StorageDeviceProperty
request."

...would mean only 1 partition shows up in Windows:

"Q. What is a superfloppy?



A.  

Removable media without either GPT or MBR formatting is considered a "superfloppy." 
The entire media is treated as a single partition. 


The media manufacturer performs any MBR partitioning of removable media. If the 
media does have an MBR, only one partition is supported. There is little 
user-discernible difference between MBR-partitioned media and superfloppies. 


Examples of removable media include floppy disk drives, JAZ disk cartridges, 
magneto-optical media, DVD-ROM, and CD-ROM. Hard disk drives on external buses 
such as SCSI or IEEE 1394 are not considered removable."

Here are some tools that flip the RMB (which is unnecessary in this case):
Laxar's USB Format Tool
Bootice
RMPrepUSB

These are software approaches (again unnecessary in this case):

Create a dummy.sys Driver

Use the Hitachi Microdrive Filterdriver

Credit:

TSJNachos117 Live USB on a 2-partition usb-drive
http://ubuntuforums.org/showthread.php?t=1020293
https://stackoverflow.com/questions/2598502/howto-flip-removable-bit-on-usb-drive-in-c
http://www.rmprepusb.com/tutorials/multipartufd

I found an alternative way which is more straightforward. There are 2 important pieces of information one needs to understand about why this works. The first is about the boot process and how the initial power on self test (executed by the BIOS) looks for a boot record on the first boot sector of the devices attached. This is a small file which basically passes the boot execution process onto the boot loader/manager such as GRUB2 on newer linux installs. For more information on this, read this very informative post.

The 2nd piece of information is to understand that the ISO downloads for Linux OSes are designed to be installed on a disk (CD/DVD/USB) and not for a partition. These ISOs need to be modified using a small tool which can be found on the syslinux-utils package, called isohybrid. The ISO modification for installation on a partition is done with the --partok flag. I found this information from this post which describes the exact same issue.
I am not sure how the --partok magic works, I searched for some explanation but could not find any.

In summary, here is what I did to get my live PureOS install to boot from a usb partition,

1. Partitioned my USB using GNOME disk, I initially formatted the disk using MBR/DOS. I created a 4GB partition (FAT32) followed by a an ext4 linux partition in the remaining space for my backups.


2. Next I modified the ISO file I downloaded to make it bootable from the partition. To do this I had to install the syslinux-util from my repo sudo apt-get install syslinux-util in which the isohydrid tool resides. I then modified the ISO file, isohybrid --partok pureos.ISO
   


3. I used dd to copy this ISO to the above partition. You can get the partition device from the GNOME disk details. dd if=pureos.ISO of=/dev/sdb1 bs=1M.
   
   
   
   
   4. from GNOME disk I edited the partiton and checked the Bootable option which installs the required book record.
   
   
   
   

I was now able to boot from the USB key into the live CD and use it as a recovery soluton while storing my system backups on the other partition.

The simple answer is yes, but you can go simpler!

make sure you an ISO of the Linux flavour you want on the drive and UNetbootin, available from here: http://unetbootin.sourceforge.net/

Make sure you select Hard Disk install from the drop down and to copy all your data from the drive before starting. You should be able to use the rest of the space for your other purposes!

Persistent live drive

You can use mkusb to create a persistent live drive. It will create 5 partitions. See this link,

help.ubuntu.com/community/mkusb

• Partition #1 has the label 'usbdata' and the file system NTFS, which can be used by both Ubuntu and Windows in order to store files and transfer files between computers.



• 
  

  The other partitions belong to the Ubuntu persistent live system.

  
  
  

  See this link for more details,

  
  
  

  help.ubuntu.com/community/mkusb/persistent#Partitions

  
  
  
  
  

  1. partition: (NTFS) usbdata for storage and transfer of files

  
  

  2. partition: GPT: bios_grub flag for booting in BIOS mode; MSDOS: extended partition

  
  

  3. partition: (FAT32) boot partition

  
  

  4. partition: (ISO 9660) cloned iso file

  
  

  5. partition: (ext4) casper-rw or live-rw or persistence

  
  
  
  

Details

Details about the partitions from and after making the persistent live system:

...

parted -s "/dev/sdd" print

Model: SanDisk Extreme (scsi)

Disk /dev/sdd: 16,0GB

Sector size (logical/physical): 512B/512B

Partition Table: gpt

Disk Flags: 



Number  Start   End     Size    File system  Name     Flags

 2      1049kB  2097kB  1049kB               primary  bios_grub

 3      2097kB  258MB   256MB   fat32        primary  boot, esp

 4      258MB   1791MB  1533MB               primary

 5      1791MB  8902MB  7111MB  ext2         primary

 1      8902MB  16,0GB  7111MB  ntfs         primary  msftdata



lsblk -o MODEL,NAME,FSTYPE,LABEL,MOUNTPOINT,SIZE "/dev/sdd"

MODEL            NAME   FSTYPE  LABEL                    MOUNTPOINT  SIZE

Extreme          sdd                                                14,9G

                 |-sdd1 ntfs    usbdata                              6,6G

                 |-sdd2                                                1M

                 |-sdd3 vfat    usbboot                              244M

                 |-sdd4 iso9660 Ubuntu 16.04.1 LTS amd64             1,4G

                 `-sdd5 ext4    casper-rw                            6,6G

</pre>

 Done :-) 

The target device is ready to use.

'ubuntu-16.04.1-desktop-amd64.iso'

was installed

gparted in 16.04 LTS not recognizing iso 9660 file system and bios_grub boot image:

gparted in 17.10 seeing iso 9660 file system and bios_grub boot image:

1. You want to preserve the main part of your USB as FAT32 storage 14GB


2. You want LiveUSB part in Ext4 2GB

Then the layout of your USB follow:

sdb1 14GB Fat32 storage and EFI folder

sdb2 2GB Ext4 LiveUSB

1. You have to create the Fat32 part fist to be seen under Windows, as without many tweak, Windows only mount the 1st partition of your USB


2. This Fat32 partition also hold EFI folder to boot your LiveUSB part


3. If you want the LiveUSB partition sdb2 on Ext4. By default, the built-in bootx64.efi of the LiveUSB will not boot an Ext4 partition.
   So I have made a tweaked bootx64.efi. You just copy the file to sdb1/EFI/boot/. And it will boot your Ext4 LiveUSB part. All of my detail here https://github.com/sonvirgo/Ext4-LiveUSB