First "Error 2" then wont install Ubuntu from USB

My 4m old Acer w/ Limpus (512ram, 8ssd + 8 on card) worked fine until a day ago. Then it gave an Error 2 on boot (grub error?). I decided to use this opportunity to move to Ubuntu. With the extra memory card removed:

First attempt: Unetbootin. This booted ubuntu for me, started the install, but froze during disk partition.

Second attempt: I booted a desktop XP into Ubuntu 8.10 using the live cd. From there I installed Ubuntu onto a 1g usb. I booted into the USB which then drops into BusyBox and waits for a command.

Third attempt: ...well, maybe you guys have a suggestion.

Thanks.

 

I was trying something similar last night, but with 8.04.1, and I too got the BusyBox console.
Check these links from pendrivelinux:

http://www.pendrivelinux.com/usb-ubuntu ... /#more-401
http://www.pendrivelinux.com/live-ubunt ... /#more-630

Note that with 8.04.1, you have to download different syslinux.cfg and initrd.gz files to avoid the BusyBox terminal. You can ignore those parts of the tutorial that refer to /dev/sdx2 since you are using the USB drive to install to the AAO, not as a persistent USB install. You may find that 8.04.1 works better in terms of networking and video performance anyhow.