Tested machines: Thinkpad T41 Thinkpad T60 1) diskboot.img dd'ed onto a USB stick. 2) "Boot error" is the only thing you see when booting. Doesn't even reach kernel.
Sounds like a BIOS problem. IIRC with my Thinkpads I had to put a DOS partition table on the stick, mark partition 1 as bootable, and dd the image onto /dev/sdX1 instead.
Indeed, that solves the problem here. Damn Thinkpads. GRR..