I get the same bug at my site, where Gutsy is installed on hard disk.
Hopefully the attached .xsession-errors will shed some light on it.

** Attachment added: ".xsession-errors"
   http://launchpadlibrarian.net/9282706/.xsession-errors

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Gutsy Login results in X restarting (therefore putting you right back at the 
login screen) when using LiveCD
https://bugs.launchpad.net/bugs/132207
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