Install knoppix on usb with disk utility?
I have come across a similar issue merely trying to image dmg files to external disks with Disk Utility.app. Apparently, Disk Utility would prefer that before you begin your restore that you select the disk image in the left, and under the Image menu, select "Scan Image for Restore," and after that process completes, then try the imaging operation. If you have already errored, you need to quit Disk Utility and relaunch it, or you will continue to get the same error.