Hello,
I just completed my lfs 7.7.
When I write
grub-mkrescue --output=grub-img.iso
I receive
xorriso : FAILURE : Cannot find path '/efi.img' in loaded ISO image
This happens because the latest grub2 uses (U)EFI as default. If you
want to boot using MBR you can use
grub-mkrescue -d /usr/lib/grub/i386-pc/ -o rescue.iso
This is also correct for x86_64 machines. Please enjoy.
Gerhard
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