grub2 loop back is not working

[J. Bakshi]

Dear list,

I have upgraded my grub installed in my pendrive from 1.95 to 1.99
And now the .iso images are not booting any more. oOne such configuration
is

`  `  `  `
 menuentry "Ubuntu Live 11.10 64bit" {

        set root=(hd0,2)
        loopback loop (hd0,2)/ubuntu-11.10-desktop-amd64.iso
        linux (loop)/casper/vmlinuz boot=casper 
iso-scan/filename=/ubuntu-11.10-desktop-amd64.iso noeject noprompt --
        initrd (loop)/casper/initrd.lz
}

` ` ` ` `

I have found only the entry having loop is causing the problem.
How can I use the configuration in grub2 then ?

Thanks