Comment 1 for bug 746257

I think this is probably the same as bug 742967. I thought at first it had something to do with my install being on a non-windows partition, but I've been suspecting that the partition part was just coincidence and timing as grub was modified between my test installs. Anyway - there is some analysis there about new sections of grub.cfg that may be useful.

Quote:
This is the section of grub.cfg that differs from a lucid 10.04.2 grub:
function load_video {
true
}

insmod part_msdos
insmod ntfs
set root='(/dev/sda,msdos3)'
search --no-floppy --fs-uuid --set=root 8654915254914639
loopback loop0 /ubuntu/disks/root.disk
set root=(loop0)
if loadfont /usr/share/grub/unicode.pf2 ; then
  set gfxmode=auto
  load_video
  insmod gfxterm
fi
terminal_output gfxterm

I find if I remove the bit from "insmod part_msdos" to "set root=(loop0)" it boots fine.