I had the same problem trying to run Ubuntu 6 from a usb stick on a Dell
9200.  It was not something that happened every time I used it.  I
recently found that 7.1 can also be run in the same way and see the
problem there too.  Also after running it a few times. The solution
proposed here does not work as there is no alternative way of accessing
the storage in this environment.  A solution appears to be also proposed
at http://ubuntuforums.org/showthread.php?t=527615, but trying this
simply destroys Xsession on my system.  I have created a second
administrator account on my stick tio see if I can fiddle something the
next time it occurs, but if that doesn't work, this bug is a real show
stopper.  I don't want to create a new usb stick every time I use it.
There is no point in a persistent model if one has to do this!

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can't logon using USB dongle with 7.10
https://bugs.launchpad.net/bugs/197454
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