I am in the same shoes:
The external USB drive is running fine with Arch, but when I remove all USB drives , the E02 does not boot into original image.
I did remove the comment from the rcS file to allow the factoy service to start, but I think it never even makes there.
The LED starts to flash rapidly green, then it turns solid, then it turns off. And finally cycle repeats indefinitelly.
The unit doesn't grab DHCP, so I can't ssh to it.
When I insert my Arch USB drive, it boots fine into it.