It should work fine on the flash drive - it is just another type of drive, like the external drive you have from PGM.
The only issue that might cause you trouble with this approach are some vst's, or external programs that like to be installed in the traditional Windows way (assuming a Win pc). Don't know how that works out on a flash.
You said you thought about installing BIAB on your 'new' pc, so that leads me to think that even an entry level pc should have a 500gb or 1TB capacity drive. The 45gb for BIAB is a drop in the bucket by todays standards. Laptops may have smaller drives but still more than enough to handle BIAB.
Personally, just knowing myself as I do, I would be afraid of having all of my song work on a flash drive because I know I'd loose it in about a week or less. I have never misplaced my desk top pc.
Good luck, and if you try it on the flash let us know how it goes.