I'm running into some performance issues with my Pico8 USB setup on windows, based on this post where whatever game I am running will freeze, lag, and overall perform badly. I've tried basic games I have made along with ones online and the issues happen no matter what. I have tested Pico8 installed directly on my PC and that does not have any performance issues.

From what I can tell, the usb drive I am using (4gb) has a read/write speed in the range of 10 MB/s, and most likely is USB 2.0, so definitely on the lower end. Is there a R/W range I should look for in a new USB or could it be a different issue?

I don't know about pico-8, but I used to have laggy and frame skipping when I used to play steam games on a SATA HDD (mainly Factorio). All of it went away when I switched to an nvme drive with higher rw speeds.

I think you'll definitely need more speed than a USB stick. But if you have to use USB, try getting the fastest you can afford. USB 3.2 assuming your computer has a port that supports it.