This thread has become about getting the Live USB prepared and you would have found more answers there. You don't need to edit Grub on the Live USB. Something odd here.
1 - Make a live USB stick
2 - Set NC10's boot preferences in BIOS for USB stick before internal drive
3 - Put USB stick in NC10 and switch on
There is more than one way to make a bootable, Live USB setup (that is, after all, one of the allures of Linux
However, if you feel the OP has gone off on a tangent, then he should move these specifics questions to the appropriate thread (which I linked to previously), or start another, if required...the thread I linked to had activity as recently as May 13th
, 2010, so it still appears to be marginally active...
A question, though. If this ends up being the solution he's looking for, what happens to this thread? should it be abandoned? Renamed? It is still possible this may help someone in addition to opie.
For now, for opie's perusal, I will post what my menu.lst on my USB stick looks like, along with a directory listing to compare it too.