Was having the same problem my girlfriend's Acer TravelMate 2301LC.
I had replaced the 40GB harddrive with a new 250GB one.
The larger harddrive seems to be a recurring factor in this bug.

So far I've been editing grub.cfg to remove the search line each time.

Anyway, I solved the problem by installing the following PPA:
https://launchpad.net/~fzielcke/+archive/grub-ppa

This includes the 1.98 grub version which seems to have fixed the bug.
I make no claims that this will work for you, you've been warned ;)

-- 
Grub 2 problem, error: no such device
https://bugs.launchpad.net/bugs/403408
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