SCCM 2007 R3 / Offline USB Media

Question

Has anyone come across a issue where they are having problems installation msi applications from a usb media deployment (created using 'Create Task Sequence Media')?
The task sequence runs fine, without any issues, if run from SCCM server/DP
If I create a external usb media, I can boot into Windows PE, it applies the wim and starts to install the software. The task eventually fails with 1612 error, unknown media..
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Looking for sourcelist for product {AC76BA86-7AD7-1033-7B44-AB0000000001}
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Adding {AC76BA86-7AD7-1033-7B44-AB0000000001}; to potential sourcelist list (pcode;disk;relpath).
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Now checking product {AC76BA86-7AD7-1033-7B44-AB0000000001}
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Media is enabled for product.
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1402 2: UNKNOWN\Media 3: 2
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1402 2: UNKNOWN\Media 3: 2
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Attempting to use raw LastUsedSource value.
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Source with value name 'LastUsedSource' is blank
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1706 2: -2147483647 3: AcroRead.msi
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Attempting to use LastUsedSource from source list.
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Processing net source list.
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1402 2: UNKNOWN\Net 3: 2
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1706 2: -2147483647 3: AcroRead.msi
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Processing media source list.
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1402 2: UNKNOWN\Media 3: 2
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1402 2: UNKNOWN\Media 3: 2
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1402 2: UNKNOWN\Media 3: 2
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1706 2: -2147483647 3: AcroRead.msi
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Processing URL source list.
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1402 2: UNKNOWN\URL 3: 2
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1706 2: -2147483647 3: AcroRead.msi
MSI (s) (D4:B4) [13:51:20:999]: Note: 1: 1706 2:  3: AcroRead.msi
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Failed to resolve source
MSI (s) (D4:B4) [13:51:20:999]: MainEngineThread is returning 1612
Anyone with any ideas?
This seems to happen to all the packages installed from the usb media

Answer 1

The boot order is already set to boot from HD first
Running a normal PXE OSD build using the same task sequence works.. i only have issues when i used use a standalone media of the task sequence (i've tried both USB and DVD)
For some reason once the Win7 image is applied, the next step in the task sequence is to install applications..
The first application installation task eventually fails with 1612 error, unknown media..
MSI (s) (D4:B4) [13:51:20:999]: SOURCEMGMT: Looking for sourcelist for product {AC76BA86-7AD7-1033-7B44-AB0000000001}