I found this site which describes the process for adapting an existing system to USB-boot.
The challenge with the X-board is that the onboard 128MB is the primary IDE partition - /dev/hda - and you can install one other IDE device as the slave - /dev/hda. The bios supports booting from /dev/hda, /dev/hdb (HD or CDROM), USB (mass storage), or network. No second IDE channel for /dev/hdc and /dev/hdd devices. I have a regular IDE DVD-ROM drive and one of those external USB HD cases. I can boot off an HD in the USB case, but stock-Linux installs "forget" that they're running off USB; the DVD-ROM isn't recognized as being a bootable device, so it has to be in the /dev/hdb IDE device mode to be usable.
So now I'm going to try the LFS route onto a bootable USB IDE drive, then use that to build a more compact install into the onboard /dev/hda 128MB flash.
Now if I could just find a source for the 200-pin SODIMM connectors to built a 'bot around this board...