Hi there wiregrasscm.
I just thought I might add a few comments that may be of assistance.
When you are creating the image do you have your antivirus software turned on / active?
If so, that could be the cause of your "I/O" problem (delayed writing due to av checking every file and/or analysing particular files further due to suspicion).
I, too, have had an instance on one of my TechWARU sticks where it loads the environment fine but no techwaru. I recreated the image (similarly advised by Ian with no drivers or a variation of drivers) and had success with a complete boot of environment and tools on that particular machine I was testing on at the time.
I have also had a few machines that do similar things. Loads the environment but little else. I reckon drivers.
I suspect that different drivers provided within the creation of the image will affect how the drivers load. Probably more notable driverpack inclusions would be chipset drivers (usb variances, host, generic, etc. & 2.0, 3.0, eSata, etc). Just a theory, but, it makes sense. Different chipset, different driver, no chipset drivers, default drivers, multiple chipsets, best guess driver, multiple type usbs, no drivers. Its like Device Manager Musical Chairs... without music. I guess fundamentally it falls down to the machine you are working on and the drivers you have included or not included in the image.
At the moment I am running 3 different sticks / flash drives / usbs of TechWARU:PE and have included different driverpacks in two of them and absolutely none on one of them. I have created one stick with drivers more towards desktops and one more towards notebooks. Seems to do the trick for now but I am still trying different images and getting away with what I have got to do what I want / need to do. Can not wait for the polished product.
In the interim, I hope this helps.