1) indeed, as i can see, you dont have grub stage1 file. I dont have experience to suggest anything on this. But you can try to copy boot/grub/stage1 from your PC into the USB-- boot/grub/. Because my knowledge says that stage1 is same everywhere.
2) edit the menu.lst of your USB, where it is written "root=/dev/ram", change it to how your system detects your USB(as you said it is /dev/sdb1) so make it "root=/dev/sdb1".
3) if you can see the grub prompt it means that grub is booting up the(not sure whether it is booting stage1 or not).
link should help you more on grub and its stages, try it.
Note: try 2nd option first.