Thanks Michael,
“Filesystem type unknown, partition type 0x7” That is a NTFS partition.
I don’t know what the FS is on internal HD, but it is not accessed and can’t be, as it is hardware-side encrypted. However what is strange, is that /dev/hdc1 starts on cylinder 2 - I don’t think it’s normal. Fdisks displays several (not critical) warinings, including that the disk capacity is not used completely.
Are you being dropped to the grub prompt after error ?
Yes, correct. I can edit the commands executed by grub, however there’s nothing to correct, all references appear to be completely correct. I.e. it says “root (hd1,0)”, that is correct (as internal (hd0,0) can’t be accessed). I also tried (hd2,0) to make sure it is not switched with 2nd [install] flashdisk, but it’s not the case. Strange thing is, that when executing command of the grub, if I have 2nd flashdisk attached, it’s blinking for a few seconds, while the /dev/hdc flashdisk doesn’t.
So a generic boot code is in the MBR (hd0) and the boot flag would be needed on (hd0,1)
…good thinking, but no, this time it isn’t. I made sure to uncheck the option to use MBR in YaST during the installation. Only /dev/hdc is used for booting. The problem is, that after it reads those few bytes in stage 1, it should then boot from /boot, but for that it needs to mount the device - and it’s failing to mount the device (either correct one or at all).
The first (hd0,1) is where /boot/grub/ is found and the second (hd0,1) is where grub will be installed.
In my case, /boot/grub was located in separate disk (hd1,0) “/boot” preivously, now I made just one system (and one swap) disk without separate “/home” and “/boot” disks at the same location (hd1,0).
I know it’s the correct disk, as I can MOUNT the partitions from rescue system (so I was able to mount “/boot” disk as /dev/hdc1 device previously).
I think that source of the confusion is simple: When installing the system, I have three disks in:
- Internal /dev/hda - (hd0)
- Installation flash disk /dev/hdb - (hd2) - obviously, to boot the installation, it has to be plugged in before the future system disk
- Target system flash disk /dev/hdc - (hd1)
When making first reboot after installation, I have to obviously unplug the /dev/hdb. The /dev/hdX is assigned by disk ID, so stays correct (and I helped it by switching order to hda-hdc-hdb).
I am really appreciating your effort! Finally we will find out that the cause is something stupid, simple 
Here is grub command:
root (hd1,0)
kernel /boot/vmlinuz-2.6.34-12-desktop root=/dev/disk-by-id/usb-Kingston_DT_101_II_001372xxJUSTNUMBERSxx-0:0-part1 resume=/dev/disk-by-id/usb-Kingston_DT_101_II_001372xxJUSTNUMBERSxx-0:0-part2 splash=silent quiet showopts
initrd /boot/initrd-2.6.34-12-desktop
This code is shown when going to edit mode in stage1 of grub booting and obviously is read from /boot/grub/menu.lst.
Here is content of /etc/grub.conf:
setup --stage2=/boot/grub/stage2 --force-lba (hd1,0) (hd1,0)
quit
Here is content of /boot/grub/device.map:
(hd2) /dev/disk/by-id/usb-_USB_DISK_2.0_xxxxxxxxxxx
(hd1) /dev/disk/by-id/usb-Kingston_DT_1O1-II_0013xxxxxxxxxxx
(hd0) /dev/disk/by-id/ata-ST916xxxxxxxxx
I am on this 2nd day, so a kick into right direction is well appreciated.
Best regards,
Oak