I have installed a full kubuntu 9.10 distro on a WD MyPassport USB HDD. Grub2 is installed on the USB HDD. It boots perfectly on our Dell Inspiron 1545 laptop. I have tried unsuccessfully to get it to boot on our Dell Studio Hybrid. Grub tries to load but returns the Grub Rescue prompt:
Grub Rescue> Unknown filesystem.

I have tried booting with the live cd than reinstall grub, recheck grub-install. Everything reports good. When I reboot from the USB HDD the same thing.

I have read everything I can find, but no success.

I had trouble with a similar drive by the same company in a similar enclosure. It would see it on my CentOS server one day, then the next it would not mount. Finally I gave up, pulled it out of the case and put it directly into that machine. It's worked fine ever since. Go figure.

Anyway, I suggest removing any KVMs, if you are using them. Also try disabling USB 2.0 in the BIOS and see if that enables it to at least boot. Also, are you using a very long or extended USB cable? Don't know why GRUB comes back good. Hopefully something here will spark an idea for you and you can get this fixed. Best of luck!