Comment 4 for bug 888281

Modifying to use loop1 in the menu entry works:
menuentry 'Ubuntu - backup new.disk' --class ubuntu --class gnu-linux
--class gnu --class os {
        set gfxpayload=$linux_gfx_mode
        insmod part_msdos
        insmod ntfs
        set root='(hd0,msdos3)'
        search --no-floppy --fs-uuid --set=root 18B4B7BBB4B799A8
        loopback loop1 /ubuntu/disks/new.disk
        set root=(loop1)
        linux /vmlinuz root=UUID=18B4B7BBB4B799A8
loop=/ubuntu/disks/new.disk ro quiet splash vt.handoff=7
        initrd /initrd.img
}

Not sure if this has memory implications, but it seems like it would solve
this problem for FAT32 if the usr.disk was setup on loop1.