If you are talking about grub2 (not legacy)

Yes, usually disk must be mounted because grub-install copies grub files to 
--root-directory
for example grub-install --root-directory=/mnt /dev/sdb will copy grub files to 
/mnt/boot/grub and install grub to /dev/sdb (if /dev/sdb1 is mounted on /mnt)

You can also not use grub-install and use grub-mkimage to create core.img and 
then use grub-setup to write boot sector and then manually copy files to prefix 
dir.

If you are talking abount grub-legacy, then i never used grub-install and 
manualy copied files and:
grub> root (hd0,1)
grub> setup (hd0)
grub> quit

I assume you can do this (and grub-install) on mounted partition too.

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