I don't understand why users assume this is a problem with UBCD, or originated in pmagic. If this were to be the case, many users would had complain already.
Because there is no indication otherwise and the error implies that there are missing or mis-configured files on the media.
It is in fact related to how the USB drive is partitioned and/or formatted and/or how UBCD was transferred to the USB drive. This type of problems are typical of "multiboot" builders.
Well, I for one made the USB stick by following the directions on the page. No changes from what I downloaded from the ISO at all. That is, ubcd\tools\win32\ubcd2usb
I'd appreciate an answer and actual fix, not a "hint". UBCD has always been a great tool for fixing/configuring computers, and it's not nice that it doesn't work now. I'd like to not become an expert on customizing UBCD first before getting back to the task at hand, especially when I have no need to customize it at all and just want to use the stock image.