Procedure to create linux bootable USB Disk
The first step, copy the linux source files to the folder /var/ftp/pub/images from the iso file or linux Installation CD.
The Second Step, Insert the USB Disk and type the following commands in linux prompt
Change the current working directory to /var/ftp/pub/images
root@linuxsrvr #] dd if = diskboot.img of=/dev/sdb
where sdb is usb disk and image file is taken from pub/images folder.