This is the setup I have:
The Iso is extracted to a Fat32 partition.
Grub4Dos boot from a menu entry that looks like this...
title PCLinuxOs LiveCD
kernel (hd0,4)/isolinux/vmlinuz livecd=livecd initrd=initrd.gz
root=(hd0,4) acpi=on splash=verbose fstab=rw,auto
At which point Grub does something and then the PCLinuxOS iso begins to load. Detecting hardware, starting systems etc. at the end of which- I get the muddled graphic