You have to use the appropriate live-media-path settings. Have a look at the specific grub configuration 
file. Please also consider using the provided loopback.cfg file (or if you have an older grub version use 
the boot/grub/%SHORT_NAME%_default.cfg file)

To provide the additional kernel parameters you would have to export them via:

set kernelopts="ssh ...."
export kernelopts

before loading the configfile.

Hi,

my main use of grml is booting the iso from a disk using the following grub
configuration:

menuentry "grml64-small_2012.05-rc1" {
  loopback loop /boot/grml/grml64-small_2012.05-rc1.iso
  linux (loop)/boot/grml64small/vmlinuz quiet lang=de boot=live noquick noeject
noprompt nodhcp bootid=grml64small201205rc1 radeon.modeset=1 keyboard=de
findiso=/boot/grml/grml64-small_2012.05-rc1.iso toram=grml64-small.squashfs
  initrd (loop)/boot/grml64small/initrd.img
  }

This stopped working quite a while ago (well before the last release) when the
squashfs was moved from - for example - live/grml64-small-daily-sid.squashfs to
- for example - live/grml64/grml64.squashfs. The code in is_live_path ()
{
        DIRECTORY="${1}"

        if [ -d "${DIRECTORY}"/"${LIVE_MEDIA_PATH}" ]
        then
                for FILESYSTEM in squashfs ext2 ext3 ext4 xfs dir jffs2
                do
                        if [ "$(echo ${DIRECTORY}/${LIVE_MEDIA_PATH}/*.${FILE
                        then
                                return 0
                        fi
                done
        fi

        return 1
}

still looks in live/ only, not in subdirectories of live/.

I cannot suggest a patch at the moment since I do not quite know what do to
here. But this bug should be easy enough to fix with the current diagnosis.

Sorry for not detecting this any earlier.

Greetings
Marc