LiveLinux USB Creator (formerly uSbuntu) is a free software for Windows that allows you to create a bootable Live USB key with a Linux on it.It supports many flavours and distros of Linux.The best thing about this software is that it offers an exclusive option of automatic virtualization using portable virtual box to directly run Linux in Windows without any configuration nor installation.

The GUI of VirtualBox does not have an option to boot a USB drive (Physical Drive) in a virtual machine.
However you can attach a physical drive to a virtual machine using a command line tool that is bundled with Virtual Box.You can then boot your virtual machine from the attached Physical drive.

Just like how you can boot a computer using a bootable CD,you can also boot a computer using a bootable USB drive.
You can test a bootable USB Drive within Windows without restarting your computer.This is helpful when your motherboard does not support booting from a USB Drive.