This worked:
[url]http://www.fogproject.org/wiki/index.php?title=Modifying_the_Init_Image[/url]

I am having the same error. Is there a fix for this? I have tried everything.

/bin/fog: line 1169: gunzip: not found…

[I]“Changing hostname … unmount: can’t umount /nfts: Inv[/I]
[I]Done”[/I]