im not sure how to install image to a separate partition.
previously i was using this guide to install images to single partition. i tried and it tarred the image to mnt/usb/usb3 but it wouldnt boot.

cd /tmp
mount # you will see mounted usb dev/sda1 or sdb1
umount /dev/sda1
mkfs.ext2 /dev/sda1 -L ext2
mount /dev/sda1 /mnt/usb #if you see mounted usb0 than mount /dev/sda1 /mnt/usb/usb0
#with ftp put your E2 in mnt/usb or mnt/usb/usb0
cd /mnt/usb # or cd /mnt/usb/usb0
ls -aln
tar xzvf yourE2.tar.gz
sync
sync