The backing-store file does not have to be on the same partition as sysresccd. It means you can have the main SystemRescueCd files installed on an USB-stick, and you can have a backing-store saved on another USB-stick. Anyway, the most convenient way o use it is to save both the main SystemRescueCd files and the backing-store on the same USB-stick.
Here is how to create and use a backing store:
The default place where to save the backing-store is the root of a partition in a file named sysrcd.bs. You are free to save the backing-store in an alternate location or with another name. In that case the file will not be automatically found by SystemRescueCd unless you specify the path using the following boot option: backstore=/path/to/mysysrcd.bs. By default, SystemRescueCd-1.1.0-beta20 and newer scan all removable disks (eg: usb sticks) at boot time. If your backing-store file is on an hard-disk partition, you will have to boot with the option backstore=alldev so that it scans all block devices, not just removable ones. You can specify two options in the same time, for instance backstore=alldev,/path/to/mysysrcd.bs will search any file named /path/to/mysysrcd.bs on any block device of your computer.
You can also grow an existing backing-store with no data loss:
###