Grub2 Installation on a USB thumb drive : 'file not found' at boot

[Frédéric Boiteux]

    Hello,

  I'm trying to migrate my USB thumb drive's boot system from Grub 1.96
to Grub2 (1.99rc1). My USB drive is formatted with 2 partitions, first
in FAT16, second in ext2
  First I had some problems to install Grub2 on this drive, giving
messages like :

# grub-install --recheck --no-floppy --boot-directory=/media/FredLin/boot/grub/ 
/dev/sdb
/usr/sbin/grub-setup: warn: Your embedding area is unusually small. core.img 
won't fit in it..
/usr/sbin/grub-setup: warn: Embedding is not possible.  GRUB can only be 
installed in this setup by
using blocklists.  However, blocklists are UNRELIABLE and their use is
discouraged..
/usr/sbin/grub-setup: error: will not proceed with blocklists.

 I have do resize and move my first USB drive's partition (using gparted) to be 
able to install Grub2 on it.

The installation process copied grub files on the second partition (ext2) in 
/boot/grub/ (on this partition), and I built a /boot/grub/grub.cfg by hand to 
handle the different systems I could boot from this thumb drive (GRML from its 
ISO file for example, or Debian Squeeze installer).

When I boot this USB drive, I see the Grub messages :

GRUB loading.
Welcome to GRUB! [in inverse mode]

error: file not found.
Entering rescue mode...
grub rescue>


And then, I don't have any command available (trying TAB), and I don't know 
what to do to fix the boot menu ?

  Thanks for any hint,

        Fred.