
We want to give 2GB USB Sticks to a group of students for a project they are involved in. The HoD wants the sticks partitioned into a 500MB read-only partition where a lot of Word documents, Excel spreadsheets, pdfs and mpegs relating to the course will be kept for the students to refer to, and the rest as a partition where they can keep their own work files as they progress.
I've done some experimentation, but how can I create the read-only 500MB partition as permanent and untouchable by disk management / partitioning tools?

The short answer is "you can't modify a conventional usb flash drive to do that in a non-reversable way that doesn't involve a soldering iron". It's read-write media.
The long answer is you might be able to buy a custom usb drive that has a main storage area and another one containing read-only data of your choosing, but it'll be pricey unless you're doing large (hundreds) batches. Look at promotional firms that offer autolaunching usb buttons and flash drives with cd-rom functionality. Googling custom usb read-only brings up a bunch of suggestions.

As far as I'm aware you can't actually partition a memory stick. I remember trying years ago with Partition Magic and it didn't work. I suppose the only way (in theory) would be to make the memory stick appear as a hard disk.

Some useful info here. Although usb controller vendor specific.
Depends on how much it matters if they can bypass the "read/only" state; if you're just wanting to stop people accidentally messing up the settings then it's not too hard.
If you format the drive as NTFS then you could put a folder which is read/only for users. This isn't a total fix - if they take it home and know what they're doing it would be easy to take ownership of the folder and reset the permissions.
I like @sysman_mk's idea of making a CDFS partition; that would really make it r/o but it wouldn't stop people from just wiping and remaking the partition if they wanted to mess things up.
The other possibility would be to put a Linux ext3 partition on the drive; Windows can't read this natively but it's easy to install a read/only FS driver (but the determined users will find a way to install a r/w driver as well ...)
@michael - gparted will easily partition USB sticks
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