utu:
The /boot/grub directory is always empty by default. Should you choose to use grub to boot the liveUSB you can copy all the files from your installed /boot/grub directory into that empty one, adjust the boot stanzas in the copied menu.lst to use the files in the isolinux directory, then install grub to the MBR of the USB device. In my case I use a partition on the hard drive rather than a USB stick, because the hard drive itself is in a USB case thus as portable as a USB stick but 1 TB in size. Still, the principal is the same, as are the stanzas used to boot the various OS.
Having multiple boot options, I have the isolinux directory inside of a directory named for the OS to be booted, so to boot the live minime, I have this stanza;
title minime live
root (hd0,12)
kernel /minime/isolinux/vmlinuz livecd=minime initrd=initrd.gz fromusb root=/dev/rd/3 acpi=on vga=791 splash=verbose fstab=rw,auto,noatime
initrd /minime/isolinux/initrd.gz
To boot the live Gnome version I have this stanza which is similar but looks for the kernel and initrd in /gnome/isolinux.
title Gnome Live
root (hd0,12)
kernel /gnome/isolinux/vmlinuz livecd=gnome-07 initrd=initrd.gz fromusb root=/dev/sda13 acpi=on vga=791 splash=verbose fstab=rw,auto,noatime
initrd /gnome/isolinux/initrd.gz
Note also that with multiple OS present, the livecd.sqfs file for each Os is renamed to give each a unique name representing the appropriate OS.
[polack@fatman share1]$ ls |grep sqfs |sort
gnome-07.sqfs
jphoenix4.sqfs
kde2010.sqfs
kdefinal.sqfs
minime.sqfs
ob-mini.sqfs
phoenix07.sqfs
test2-kde.sqfs
test3-kde.sqfs