Issues with booting Xubuntu from Squashfs

Hi there!

Currently I am trying to create a live-bootable custom squashfs filesystem based on xubuntu.
Bootloader is GRUB-legacy.

While boot I am facing the problem, that GRUB finds the right initramfs but while boot-process it cannot find the root-filesystem which is in the squashfs on the same USB-stick.

I have tried rebuilding initramfs with the root parameter to set the root-fs but it cannot find the partition (tried with UUID, /dev/sdxX, and (hd0,msdos1)).

I have tried building the squashfs on Xubuntu same version as in the squashfs.

Grub config as follows:
Code:et default=0
set timeout=10
insmod all_video
insmod ext2
insmod search_fs_uuid
search --no-floppy --set=isopart --fs-uuid $rootuid
menuentry "boot" --class xubuntu --class gnu-linux --class gnu --class os --unrestricted {
linux /live/vmlinuz
initrd /live/initrd.img
}Trying to do Code:linux /live/vmlinuz root=UUID=$rootuid was not successful.

Do you guys have any idea what to do?

Thank you and best regards.