The "sub-installer" (if i can call it that) for the embedded mozilla browser does not obey a custom installation path.
While all files are correctly installed still have a "c:\Program Files\NuSphere\Mozilla Browser" folder.
Not a real serious problem, but just wanted to let you know.

In the new build (5.0.1 5028) the embedded mozilla browser still installs to it's default location (Program Files\NuSphere\Mozilla Browser), ignoring any change made to the installation directory in the installer. Can this be fixed?

no, this can't be fixed easily.
What you change is PhpED's directory and it's c:\Program Files\NuSphere\PhpED\
Mozilla is intalled one level upper and it makes difference. What if you decide to install PhpED into a root directory of your flash drive? Where would Mozilla be installed?

That's not my point.
I don't install PhpED in "c:\Program Files\NuSphere\PhpED" at all.
PhpEd is installed in "c:\Program Files\Development\PhpED" on my machine. I wouldn't mind the "one level up" if it were to follow the actual installation folder.
According to your explanation, Mozilla would have to install in "c:\Program Files\Development\Mozilla Browser", which it does not.
So that makes your statement about the flash-drive invalid, as it seems you won't even manage to get it on there at all

I think, moving the files and correcting the path in the registry will do the trick.