We believe that your issue has been closed by the upload of
Version 0.9.7 of grml2usb from Michael Prokop <mika@grml.org>.
The explanation is attached below

-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA1

Format: 1.8
Date: Tue, 02 Jun 2009 23:32:13 +0200
Source: grml2usb
Binary: grml2usb
Architecture: source all
Version: 0.9.7
Distribution: unstable
Urgency: low
Maintainer: Michael Prokop <mika@grml.org>
Changed-By: Michael Prokop <mika@grml.org>
Description: 
 grml2usb   - install grml system / ISO to usb device
Changes: 
 grml2usb (0.9.7) unstable; urgency=low
 .
   * Fix typo in manpage of grml2usb (thanks to Wernfried Haas).
   * Fix bootoption toram: it should be toram=$FLAVOUR.squashfs instead
     of toram=$FLAVOUR. Thanks to Wernfried Haas and Frank Prochnow
     for the bugreport and debugging! [Closes: issue680]
Checksums-Sha1: 
 1adafb18148f98f9923f71d5310fbf3c90a7576a 875 grml2usb_0.9.7.dsc
 2d2068468645a357034cf47e9c0273d778e0c683 1216283 grml2usb_0.9.7.tar.gz
 d2564e9ff030d810336d681a47ac76d5151f6886 836950 grml2usb_0.9.7_all.deb
Checksums-Sha256: 
 6adf044cb69e2aa625912267e8e2ee3cf71ba50c2ab423c0f6a9e3e2a962ae41 875 grml2usb_0.9.7.dsc
 920ced3ab6e3c504939b078bcc08f5ac7ccf04a4c9e856b718208d7088565687 1216283 grml2usb_0.9.7.tar.gz
 fde45d77d83ec72c4ce8c52ae0c6e1d4123cdf087afba4b82b7b8546bb75e9a0 836950 grml2usb_0.9.7_all.deb
Files: 
 a83816db9bcd94056013adaab1ab7988 875 grml optional grml2usb_0.9.7.dsc
 4b058a31010f294dad176830f6a09776 1216283 grml optional grml2usb_0.9.7.tar.gz
 c8228d8723c7183435e218ffbfcb38dd 836950 grml optional grml2usb_0.9.7_all.deb

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Installed grml via grml2usb:
grml2usb --bootoptions="keyboard=de xkeyboard=de lang=at"
grml64_2009.05.iso grml-medium_2009.05.iso /dev/pretec1

Both images boot fine in normal mode, however when selecting the toram option in
the grub menu booting ends with the error you can see in the attached file.

If necessary i can try burning a "real" CD, other images or something else.

HW: thinkpad R61i with 2 gigs RAM (so not enough RAM shouldn't be the reason i
guess)