You may use your 16G USB disk two ways:
1. You may simply create an image on it and, if necessary, restore data from it. Just select the disk on the Image Destination panel. See R-Drive Image Help -> Disk Actions -> Create an Image -> Writing images on CD-R/RW discs and other devices with removable storage. If you try to backup/restore data on a system disk, R-Drive Image will re-start into its startup mode. See R-Drive Image Help -> Startup Version -> Restore Data to a System or Other Locked Disk. Please note that that your system must be working properly to use this method (your computer must be able to start up properly).
2. You may create a startup version of R-Drive Image on your USB disk to be able to start your computer if its OS failed. You may use the rest of the disk to store the image file. See R-Drive Image Help -> Startup Version -> Create Startup Disks -> To create a startup USB removable device.
I uses the second technique to backup my system disk on my MSI Wind netbook.