When I try boot the USB from bios into ubuntu 12.10 it just comes to a menu with a black screen and a couple lines of text. There is no option to run from USB even though I have persistence enabled.
Here's a picture of the screen:
I don't know why the menu looks exactly like it does, but a live USB flash drive, even with a persistent area, still provides the same boot options as a normal live USB flash drive with no persistent area.
So, to use the system on the USB drive, select Try Ubuntu without installing. It should work fine.
In case something went wrong in the creation of the live USB, I recommend testing its persistence first before assuming it works. For example, you could create a file on your desktop. Then shut down and reboot, and see if the file is still there. If it is, you should be good to go.
I had similar problems that I solved. disconnect from internet, turn off all firewalls and security. This includes windows firewall. Right click usb and click reformat, choose fat 32. Now recreate usb. Go into start menu and search for bios. Click change advanced settings or something to that effect. Enter bios settings, disable secure boot and change bios from uefi to csm. If you overwrite windows you will need to enter bios settings at the start up screen before it starts to load an operating system, by pressing one of the f1 to f12 keys and then reinstall.