I also have the same problem. I installed BT5 R2 on a 32GB flash drive. FAT32 was used with 4GB persistent storage. I used http://www.linuxliveusb.com/ install BT on the drive. Everything went well and after reading several post about how to increase persistent storage I was able to successfully make use of the remaining disk space using the tutorial http://www.pendrivelinux.com/create-...per-partition/. Everything went well until I updated backtrack using apt-get upgrade && apt-get update. I have the error found on the image below and can no longer use persistent mode.
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