hey, to solve ither people bother ill just type how i got BT3 livecd to run from hard drive so u dont need to install it which is a much better solution imo.

download iso and mount it using mount -o loop blaa.iso /mnt/

copy the subdirectory on the cd BT3 to /, then copy the boot subdirectory to /BT3/ and unmount the cd.

optional step:
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gunzip /BT3/boot/initrd.gz, mount the ramdisk using
gunzip initrd.gz
mount -o loop initrd /mnt/
u can edit linuxrc if u want to change that BT3 name to something else... and install drivers if u need that or whatever for ur BT3.
umount /mnt/
gzip -9 initrd
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use this grub entry by adding to ur grub conf (usually menu.lst)

title Backtrack
kernel /BT3/boot/vmlinuz vga=0x317 ramdisk_size=6666 from=/dev/sda1 root=/dev/ram0 rw nohd
initrd /BT3/boot/initrd.gz

the from, root and nohd params are most important here. its saying load the data from harddrive and run it from memory.

gl