When looked again in the target, directory I found the sources.list is
clean ie, does not have any repository configured but the indexes are
not cleaned (missed running an apt-get update after changing
sources.list).

apt-cache policy grub-pc shows a network repository

grub-pc:
  Installed: (none)
  Candidate: 1.99-26
  Version table:
     1.99-26 0
        500 cdrom://[Debian GNU/Linux 7.0~b4 _Wheezy_ - Official
Snapshot amd64 LIVE/INSTALL Binary 20130120-20:35]/ wheezy/main amd64
Packages
        500 http://ftp.debian.org/debian/ sid/main amd64 Packages

Now there is also another problem as it should take cdrom:// as first
priority, but it somehow can't find it, probably, as it is live USB
and apt is expecting a traditional cdrom.

This issue was reproduced in a VirtualBox VM so it is not hardware
specific (as I guessed in the beginning).
-- 
പ്രവീണ്‍ അരിമ്പ്രത്തൊടിയില്‍
You have to keep reminding your government that you don't get your
rights from them; you give them permission to rule, only so long as
they follow the rules: laws and constitution.


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