Comment 2 for bug 492301

I have now re-tried the process by creating a LiveUSB of the same image without any persistence. The usb stick now boots up fine.

Now the casper.log (at /var/log) looks like the following:

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/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
/init: line 1: can't open /dev/sr0: No medium found
Shadow passwords are now on.
Generating locales...
  en_US.UTF-8... done
Generation complete.
/bin/casper-reconfigure: package 'gnome-panel-data' is not installed
Using CD-ROM mount point /cdrom/
Identifying.. [1654452dc3b9234ba67f1922b6b6ec44-2]
Scanning disc for index files..
Found 4 package indexes, 0 source indexes, 0 translation indexes and 1 signatures
Found label 'Xubuntu 9.10 _Karmic Koala_ - Release i386 (20091028.3)'
This disc is called:
'Xubuntu 9.10 _Karmic Koala_ - Release i386 (20091028.3)'
Copying package lists...gpgv: Signature made Wed Oct 28 20:25:07 2009 UTC using DSA key ID FBB75451
gpgv: Good signature from "Ubuntu CD Image Automatic Signing Key <email address hidden>"

Reading Package Indexes... 0%

Reading Package Indexes... 5%

Reading Package Indexes... Done

Writing new source list
Source list entries for this disc are:
deb cdrom:[Xubuntu 9.10 _Karmic Koala_ - Release i386 (20091028.3)]/ karmic main multiverse restricted universe
Repeat this process for the rest of the CDs in your set.
W: Skipping non-exisiting file /cdrom/dists/karmic/main/binary-i386/Packages
W: Skipping non-exisiting file /cdrom/dists/karmic/multiverse/binary-i386/Packages
W: Skipping non-exisiting file /cdrom/dists/karmic/restricted/binary-i386/Packages
W: Skipping non-exisiting file /cdrom/dists/karmic/universe/binary-i386/Packages
 Removing any system startup links for /etc/init.d/apparmor ...
   /etc/rcS.d/S37apparmor
dpkg: warning: ignoring request to remove gdm-guest-session which isn't installed.
No value set for `/apps/netbook-launcher/favorites/favorites_list'
No value set for `/apps/netbook-launcher/favorites/favorites_list'
No value to set for key: `/apps/netbook-launcher/favorites/favorites_list'
--