Bro, you are running kde's mklive usb. I found out there are two of them, and both of them have the same problem.
Your error message "Xlib: extension "Generic Event Extension" missing on display ":0.0"
is not known to me. (try a clean install if you are not bothered to clean up).
But the problem remains the same to me also. There is a "lost+found" folder but nothing in the USB.
MODS, if we report this problem as a bug will it be solved? I did it manually (copied individually from the temp folder to the usb- eventhough it said it is cleaned it is still there and no sqfs file is copied, and all finishes in just 3 minutes), and at the boot screen i get "Grub error 18", which i don't know if it is cause of the pc bios or the setting in the grub. If somebody finds a solution, please tell us.