assuming that you did everything that isotostick.sh requires...
http://www.startx.ro/sugar/USB.README
...then this post becomes interesting...
http://forum.eeeuser.com/viewtopic.php?pid=257809
...look for a post from Narc.
my question is, why go through this problem? (hack?) why not burn it to a CD and install it to a flash drive directly? (don't forget to install the bootloader on the flash drive not on the primary partion on the hard drive in the computer)