Comment 1 for bug 1431841

I had a similiar problem, here my solution:
---
Package: casper
Version: 1.340.2

Effect:
filesystem.squashfs cannot be mounted during boot. The system is packed
in iso-image file of type "udf".

This error message is displayed:
"(initramfs) mount: mounting /dev/loop0 on //filesystem.squashfs failed: invalid argument
can not mount /dev/loop0 (...) on //filesystem.squashfs"

Problem:
During start-up, the iso-image file will not be mounted properly.
The file system of the iso-image is "udf". The mount operation is
performed with type "iso9660" instead "udf".

Reason:
The file system of the iso-image is determined with "fstype", located in
/usr/lib/klibc/bin.
Unfortunately, fstype cannot distinguish between iso9660 and udf. The
type "iso9660" is always reported, also if "udf" is the correct file type.
This leads to a wrong mount command.
The iso-image file will be mounted, but all files which are larger
then 4 GB within the image file, cannot be read correctly.

Proposal for solution:
Changes within "/usr/share/initramfs-tools/scripts/casper-helpers":
If fstype detect an iso9660 file type, an additional check is necessary
to distinguish, if it is udf or iso9660.
For this, add following four source lines (marked with "added by.."):
--- /usr/share/initramfs-tools/scripts/casper-helpers ------------------
... snip ...
get_fstype() {
    local FSTYPE
    local FSSIZE
    eval $(fstype < $1)
    # added: fstype cannot detect file system of type "udf"
    if [ "$FSTYPE" == "iso9660" ]; then # added
       /sbin/blkid -s TYPE -o value $1 2>/dev/null # added
       return 0 # added
    fi # added
    if [ "$FSTYPE" != "unknown" ]; then
        echo $FSTYPE
        return 0
    fi
    /sbin/blkid -s TYPE -o value $1 2>/dev/null
}
... snip ...
---------------------------------------------------------------------

#### Configuration #######################################
dpkg --list casper

Gewünscht=Unbekannt/Installieren/R=Entfernen/P=Vollständig Löschen/Halten
| Status=Nicht/Installiert/Config/U=Entpackt/halb konFiguriert/
         Halb installiert/Trigger erWartet/Trigger anhängig
|/ Fehler?=(kein)/R=Neuinstallation notwendig (Status, Fehler:
GROSS=schlecht)
||/ Name Version
                                            Architektur Beschreibung
+++-===========================================================-===================================================-============-================================================================================================
ii casper 1.340.2
                                            i386 Run a "live"
preinstalled system from read-only media

dpkg --status casper

Package: casper
Status: install ok installed
Priority: extra
Section: misc
Installed-Size: 256
Maintainer: Ubuntu Developers <email address hidden>
Architecture: i386
Version: 1.340.2
Depends: libc6 (>= 2.8), libplymouth2 (>= 0.8.0~-13~ppa1),
initramfs-tools (>= 0.92bubuntu55), busybox-initramfs (>=
1:1.1.3-4ubuntu3), dmsetup, user-setup, sudo, eject, uuid-runtime,
localechooser-data (>= 2.03ubuntu1), util-linux (>= 2.15-1), file, lzma,
udev (>= 174), cifs-utils
Breaks: genext2fs (<< 1.4.1)
Conflicts: live-initramfs, usplash (<< 0.4-43)
Conffiles:
 /etc/casper.conf 873654121350964ec51b3ccd8c0186cd
 /etc/init.d/casper 8bdad2b8ddb53a7450a832837593f34d
Description: Run a "live" preinstalled system from read-only media
Tag: admin::boot, admin::filesystem, implemented-in::shell,
protocol::smb, role::plugin, scope::utility, special::completely-tagged,
works-with-format::iso9660
--