installing grub2-1.99 on usb failed

[lode leroy]

Hello,

I'm trying to upgrade my pen-drive from grub-1.98 to grub-1.99,
but after doing grub-install, I only get the rescue mode prompt.

Can anyone enlighten me on what I'm doing wrong?

root:~# qemu -hda usbstick.img

GRUB loading.
Welcome to GRUB!
error no such device: 4c7e-12b1
Entering rescue mode...

grub rescue> ls
(hd0)
grub rescue> ls (hd0)/
error: unknown filesystem.
grub rescue> 


This is what I have done to make install grub on my pen-drive (image)
 
root:~# grub-install --version
grub-install (GRUB) 1.99

root:~# losetup -v /dev/loop0 usbstick.img
root:~# losetup -v /dev/loop1 usbstick.img -o `expr 62 \* 512`
Loop device is /dev/loop0
root:~# mount /dev/loop1 /mnt/stick
Loop device is /dev/loop1
root:~# grub-install --boot-directory=/mnt/stick/boot /dev/loop0
Installation finished. No error reported.
root:~# umount /mnt/stick
root:~# losetup -d /dev/loop1
root:~# losetup -d /dev/loop0

root:~# fdisk usbstick.img
Command (m for help): p
Disk usbstick.img: 1027 MB, 1027416576 bytes
32 heads, 62 sectors/track, 1011 cylinders, total 2006673 sectors
Units = sectors of 1 * 512 = 512 bytes
Sector size (logical/physical): 512 bytes / 512 bytes
I/O size (minimum/optimal): 512 bytes / 512 bytes
Disk identifier: 0xb0bcd68e
Device          Boot      Start         End      Blocks   Id  System
usbstick.img1     *          62     2005823     1002881    b  W95 FAT32
Command (m for help): q

root:~# blkid /dev/loop1
/dev/loop1: UUID="4C7E-12B1" TYPE="vfat"

root:~# fsck /dev/loop1
fsck from util-linux 2.19
dosfsck 3.0.11, 24 Dec 2010, FAT32, LFN
/dev/loop1: 287 files, 99788/250227 clusters

root:~# cat /mnt/stick/boot/grub/load.cfg
search.fs_uuid 4c7e-12b1 root
set prefix=($root)/boot/grub