Did this in a VM since I didn't want my local TCMD installation getting in the way and avoid the documented uninstall, install portable, re-install desktop method.
So, a VM with nothing on it. Read in the portable thread about extracting the contents with an arg. Another post about just copying the installed product on the desktop to the thumb drive and activating it. That's a pretty old thread though. Figured extracting was close to that - but I see your point now.
The TCMD that I ran was on the thumb drive - attached to the VM. The "activation" placed the key file in the root of the thumb drive. I place a copy in the program folder I created containing all the TCMD binaries. But that didn't help either. No surprise now that I understand install needs to do it's thing too.
So, that's what I tried. I'm not sure why I didn't just try an ordinary install, given the VM was clean. Maybe I was thinking regardless of the "drive" I installed it on there would be registry keys in the VM that were needed later.
Therefore, in a bit I'll wipe the TCMD folder on the thumb drive - leaving that key file in the root. Then I'll do a regular install - to the thumb drive. I'll run that, copying the key file into the installed folder if necessary. If that doesn't work, I'll reactivate which shouldn't be any problem since it will be the same device. Then, that should definitely work.