I don’t know anything about the debian installer, last time I did this I used arch, which is a lot more flexible with partitioning. Is there a manual partitioning option somewhere that will show the USB drive you want to install to?
For what it’s worth, I don’t recommend booting from a USB. The performance isn’t great, and there are reliability issues. On my USB, if I bump the drive, it can disconnect and cause the root partition to become unmounted, and it doesn’t recover from there. If you can backup your files, wipe the internal disk and then re-setup windows and Linux without the encryption that would definitely be the better option in the long run. Especially if you intend on doing important work on the machine.
Another option is to try out unetbootin. It can create liveusbs with persistence, but I haven’t ever tried it. It may, or may not work with debian (Ubuntu may have better support, so worth trying both if you can live with Ubuntu).