Sorry, I stepped away for a bit.
You would use the same method as you did to restore your SL disc, as long as you used Mac OS X to do it, use Disc Utility and restore it to the USB flash drive, it should be usable by popping it in to the mini and opening it, no need to run NBI. It's an application.
As far as running NBI make sure you get the new version from the 10.6.4 thread. The defaults should work for the upgrade, I would just not check Toggle Hibernation as it isn't functional, I didn't enable Bluetooth because I don't have it, I enabled Quiet Boot for a quicker boot up, but that's optional. Show NetBookInstaller Files is helpful if you are going to mess with kexts, but if not I would leave it unchecked.
Remote CD is not enabled on mine because I don't use it.
Basically, you need the Bootloader, the extensions, and Regenerate DSDT.aml all checked.
Then be sure you run NBI before you do the update and when the update finishes and the mini restarts, NBI will auto run. It will take anywhere from 5 minutes to 20+ minutes before you get to your desktop, so don't shut the mini off and be sure it is plugged in before you begin the update.
You may have audio issues afterward, I didn't but others have.