Running usbinstall in the latest microcore release (choosing 'e'xt2 install using a 'r'unning system) complains because it can't find the 'tinycore' kernel file. It should (methinks) be looking for the the 'microcore' kernel file.
I like the usbinstall script, and it worked fine for me (but only with tinycore, not microcore), but I have the following suggestions. It would help if the script:
(1) Printed a welcome message which tells what information you'll need to get together to run the script. For example, you need to know have the exact path to your /boot directory, you need (I think) to have it mounted if it's a CD, you'll want to know your boot options, etc.
(2) didn't use the term 'Running' system, since it seems the choice is between an iso and an unpacked, installed system. (It doesn't actually get the kernel from the running system in RAM).