OK - dumb question - my .img is not getting mounted , mount failed, not a block device. My understanding of -o loop option is that it will mount a file on the loopback as block device .... so ... any clue where this might be failing ?

Nokia770-49:~# fsck /media/mmc1/XFCE.img
fsck 1.37 (21-Mar-2005)
e2fsck 1.37 (21-Mar-2005)
/media/mmc1/XFCE.img: clean, 11/131072 files, 16553/524288 blocks

Nokia770-49:~# mount -o loop /media/mmc1/XFCE.img /usr/local/
mount: Mounting /media/mmc1/XFCE.img on /usr/local failed: Block device required
Nokia770-49:~#