An emulator can use a single file of the host OS, and turn it into a ``physical'' hard disk from the perspective of the guest OS. The same is also true for CD/DVDs. A single ISO image file of the host OS can be seen as a CD/DVD from the perspective of the guest OS. Needless to say, these files (hard disk image or CD/DVD image) can reside on a pen/flash drive.
A barebone emulator like QEMU requires very little storage on its own. This means the emulator itself can also be installed on a pen/flash drive. VMWare is a little bigger, plus it is not open source. As a result, it may not be a good idea to install VMWare on a pen/flash drive.
If you use QEMU, the only possible trouble is that the host OS does not have the accelerator installed, and you do not have the administrative right to do it. This does not mean that you cannot use QEMU, the emulation is just a bit slower.