That sounds like it might be a problem with how your USB drive is configured in BIOS. But first, to see if Grub is correctly configured on your USB drive, how about downloading the Boot Info Script to your Ubuntu Live CD desktop:
https://sourceforge.net/projects/bootinfoscript/
Then open a terminal (Applications > Accessories > Terminal) and do:
sudo bash ~/Desktop/boot_info_script*.sh
That will create a "RESULTS.txt" file in the same directory from where the script is run, namely your desktop; please copy/paste the contents of the RESULTS.txt file to your next post, highlight the copied text, and click the pound/hash sign "#" graphic button in the Ubuntu forum message box so that the text will get "code" tags put around it. The results of that script will help clarify your setup.
Well, my system is a Dell Latitude 110L, and the BIOS is up-to-date. I have no issues with booting up to Ubuntu on the USB flash drive I created with the Ubuntu Live CD. It may be an issue with the hdd portable casing that I put the drive in after installing, but it doesn't seem like it would be.
Here is the content of the RESULTS.txt file:
============================= Boot Info Summary: ==============================
=> Grub0.97 is installed in the MBR of /dev/sda and looks on the same drive
in partition #5 for /boot/grub/stage2 and /boot/grub/menu.lst.
sda1: __________________________________________________ _______________________
File system: ntfs
Boot sector type: Windows XP
Boot sector info: No errors found in the Boot Parameter Block.
Operating System:
Boot files/dirs:
sda2: __________________________________________________ _______________________
File system: Extended Partition
Boot sector type: -
Boot sector info:
sda5: __________________________________________________ _______________________
File system: ext3
Boot sector type: -
Boot sector info:
Operating System: Ubuntu 8.10
Boot files/dirs: /boot/grub/menu.lst /etc/fstab
sda6: __________________________________________________ _______________________
File system: swap
Boot sector type: -
Boot sector info:
=========================== Drive/Partition Info: =============================
Drive sda: __________________________________________________ ___________________
Disk /dev/sda: 20.0 GB, 20003880960 bytes
255 heads, 63 sectors/track, 2432 cylinders, total 39070080 sectors
Units = sectors of 1 * 512 = 512 bytes
Disk identifier: 0xe6fbe6fb
Partition Boot Start End Size Id System
/dev/sda1 * 63 7,807,589 7,807,527 7 HPFS/NTFS
/dev/sda2 7,807,590 39,070,079 31,262,490 5 Extended
/dev/sda5 7,807,653 37,672,424 29,864,772 83 Linux
/dev/sda6 37,672,488 39,070,079 1,397,592 82 Linux swap / Solaris
blkid -c /dev/null: __________________________________________________ __________
/dev/sda1: UUID="8EB0A3E2B0A3CF51" TYPE="ntfs"
/dev/sda5: UUID="9a3f3ac2-016a-4783-bed7-e405198c589f" TYPE="ext3"
/dev/sda6: UUID="617ac920-ee4e-4d4c-bfa0-a751dea6f615" TYPE="swap"
=============================== "mount" output: ===============================
/dev/sda5 on / type ext3 (rw,relatime,errors=remount-ro)
tmpfs on /lib/init/rw type tmpfs (rw,nosuid,mode=0755)
/proc on /proc type proc (rw,noexec,nosuid,nodev)
sysfs on /sys type sysfs (rw,noexec,nosuid,nodev)
varrun on /var/run type tmpfs (rw,nosuid,mode=0755)
varlock on /var/lock type tmpfs (rw,noexec,nosuid,nodev,mode=1777)
udev on /dev type tmpfs (rw,mode=0755)
tmpfs on /dev/shm type tmpfs (rw,nosuid,nodev)
devpts on /dev/pts type devpts (rw,noexec,nosuid,gid=5,mode=620)
fusectl on /sys/fs/fuse/connections type fusectl (rw)
lrm on /lib/modules/2.6.27-7-generic/volatile type tmpfs (rw,mode=755)
securityfs on /sys/kernel/security type securityfs (rw)
binfmt_misc on /proc/sys/fs/binfmt_misc type binfmt_misc (rw,noexec,nosuid,nodev)
gvfs-fuse-daemon on /home/windu/.gvfs type fuse.gvfs-fuse-daemon (rw,nosuid,nodev,user=windu)
=========================== sda5/boot/grub/menu.lst: ===========================
# menu.lst - See: grub(8), info grub, update-grub(8)
# grub-install(8), grub-floppy(8),
# grub-md5-crypt, /usr/share/doc/grub
# and /usr/share/doc/grub-doc/.
## default num
# Set the default entry to the entry number NUM. Numbering starts from 0, and
# the entry number 0 is the default if the command is not used.
#
# You can specify 'saved' instead of a number. In this case, the default entry
# is the entry saved with the command 'savedefault'.
# WARNING: If you are using dmraid do not use 'savedefault' or your
# array will desync and will not let you boot your system.
default 0
## timeout sec
# Set a timeout, in SEC seconds, before automatically booting the default entry
# (normally the first entry defined).
timeout 3
## hiddenmenu
# Hides the menu by default (press ESC to see the menu)
hiddenmenu
# Pretty colours
#color cyan/blue white/blue
## password ['--md5'] passwd
# If used in the first section of a menu file, disable all interactive editing
# control (menu entry editor and command-line) and entries protected by the
# command 'lock'
# e.g. password topsecret
# password --md5 $1$gLhU0/$aW78kHK1QfV3P2b2znUoe/
# password topsecret
#
# examples
#
# title Windows 95/98/NT/2000
# root (hd0,0)
# makeactive
# chainloader +1
#
# title Linux
# root (hd0,1)
# kernel /vmlinuz root=/dev/hda2 ro
#
#
# Put static boot stanzas before and/or after AUTOMAGIC KERNEL LIST
### BEGIN AUTOMAGIC KERNELS LIST
## lines between the AUTOMAGIC KERNELS LIST markers will be modified
## by the debian update-grub script except for the default options below
## DO NOT UNCOMMENT THEM, Just edit them to your needs
## ## Start Default Options ##
## default kernel options
## default kernel options for automagic boot options
## If you want special options for specific kernels use kopt_x_y_z
## where x.y.z is kernel version. Minor versions can be omitted.
## e.g. kopt=root=/dev/hda1 ro
## kopt_2_6_8=root=/dev/hdc1 ro
## kopt_2_6_8_2_686=root=/dev/hdc2 ro
# kopt=root=UUID=9a3f3ac2-016a-4783-bed7-e405198c589f ro
## default grub root device
## e.g. groot=(sd0,0)
# groot=9a3f3ac2-016a-4783-bed7-e405198c589f
## should update-grub create alternative automagic boot options
## e.g. alternative=true
## alternative=false
# alternative=true
## should update-grub lock alternative automagic boot options
## e.g. lockalternative=true
## lockalternative=false
# lockalternative=false
## additional options to use with the default boot option, but not with the
## alternatives
## e.g. defoptions=vga=791 resume=/dev/hda5
# defoptions=quiet splash
## should update-grub lock old automagic boot options
## e.g. lockold=false
## lockold=true
# lockold=false
## Xen hypervisor options to use with the default Xen boot option
# xenhopt=
## Xen Linux kernel options to use with the default Xen boot option
# xenkopt=console=tty0
## altoption boot targets option
## multiple altoptions lines are allowed
## e.g. altoptions=(extra menu suffix) extra boot options
## altoptions=(recovery) single
# altoptions=(recovery mode) single
## controls how many kernels should be put into the menu.lst
## only counts the first occurence of a kernel, not the
## alternative kernel options
## e.g. howmany=all
## howmany=7
# howmany=all
## should update-grub create memtest86 boot option
## e.g. memtest86=true
## memtest86=false
# memtest86=true
## should update-grub adjust the value of the default booted system
## can be true or false
# updatedefaultentry=false
## should update-grub add savedefault to the default options
## can be true or false
# savedefault=false
## ## End Default Options ##
title Ubuntu 8.10, kernel 2.6.27-7-generic
uuid 9a3f3ac2-016a-4783-bed7-e405198c589f
kernel /boot/vmlinuz-2.6.27-7-generic root=UUID=9a3f3ac2-016a-4783-bed7-e405198c589f ro quiet splash
initrd /boot/initrd.img-2.6.27-7-generic
quiet
title Ubuntu 8.10, kernel 2.6.27-7-generic (recovery mode)
uuid 9a3f3ac2-016a-4783-bed7-e405198c589f
kernel /boot/vmlinuz-2.6.27-7-generic root=UUID=9a3f3ac2-016a-4783-bed7-e405198c589f ro single
initrd /boot/initrd.img-2.6.27-7-generic
title Ubuntu 8.10, memtest86+
uuid 9a3f3ac2-016a-4783-bed7-e405198c589f
kernel /boot/memtest86+.bin
quiet
### END DEBIAN AUTOMAGIC KERNELS LIST
=============================== sda5/etc/fstab: ===============================
# /etc/fstab: static file system information.
#
# <file system> <mount point> <type> <options> <dump> <pass>
proc /proc proc defaults 0 0
# /dev/sda5
UUID=9a3f3ac2-016a-4783-bed7-e405198c589f / ext3 relatime,errors=remount-ro 0 1
# /dev/sda6
UUID=617ac920-ee4e-4d4c-bfa0-a751dea6f615 none swap sw 0 0
=================== sda5: Location of files loaded by Grub: ===================
15.0GB: boot/grub/menu.lst
15.0GB: boot/grub/stage2
15.1GB: boot/initrd.img-2.6.27-7-generic
15.0GB: boot/vmlinuz-2.6.27-7-generic
15.1GB: initrd.img
15.0GB: vmlinuz
I don't know, but I don't think I should be seeing ntfs on sd1. The only drive I have connected to my laptop right now is the internal hard drive that I installed Ubuntu on, the one that I want to configure to boot via USB once I pull it out of the laptop.