USB booting :: Not Exactly

I just got a 128m pen drive I tryed installing DSL onto it. It didn't work. When I entered windows and formatted it, it said it was only 118m is this normal or did I get screwed.
Second I tryed the Install to pen>hdd-install thing Didn't work can someone please help me. Did I do something wrong?
Also what the heck is a frugal instal???

Here is a thread that explains frugal.
http://damnsmalllinux.org/cgi-bin....=adssse

original here.