Kriss3d - did you follow all the steps in this HOW TO guide for installing persistent USB? Specifically, did you follow the instructions on creating and configuring the partitions and file systems, followed by installing grub? You didn't mention those steps in your original post. Your post lead me to believe you simply used Unetbootin to burn the ISO and then simply edited the menu.lst file. If that's the case, you missed quite a few steps.