I recently encountered the same error message and could narrow it down to my WinME boot environment. Win98 solved it.
I tried Loadlin 1.6c and Grub4dos 0.4.3pre2 with similar results.

@croft: Are you out of your right mind? Can you get into a car without a key? I mean, you've got the "inverse key" (keyhole) right in front of you!

Your questions reveals you don't know the least...

My IPW3945 works fine after loading /sbin/ipw3945 start. I still wonder why this isn't executed automatically?

Is the iPod bootable at all (not all USB sticks are, that's why I'm asking). If yes, one there are probably a dozen of articles installing SLAX on a USB stick... shouldn't be too difficult, is it?

The iPod has got no network access (neither WiFi, Bluetooth, LAN, ...) - so of what use would it be to have BackTrack on it?

I solved this patching hostap_cs.c to recognize my card. To make airoscript.sh work you also have to adjust some internal path variable.

Now I can use my Prism2 card for pentesting my network :D...

Well, the method mentioned in the Wiki does not help me. My card identifies itself as: "AWLAN", "WS8P/IEEE", "Version 00.00", "" manfid 0x0156, 0x0002.

So even if manually load hostap still...