This howto assumes you already have a working Katana 2.0 USB to work with that has about 2.5GB free space

  1. Download Kali. For this I used "kali-linux-1.0.1-i386.iso"
  2. Create a new directory on your Katana 2.0 USB named "kali" (without quotes)
  3. Use 7zip to extract the Kali ISO contents to the new directory you created
  4. Edit the /boot/menus/main.cfg file on your USB, and add the following below the first "ENDTEXT"
    Code:
    LABEL kali
MENU LABEL Kali
KERNEL /boot/vesamenu.c32
APPEND /boot/menus/kali.cfg
TEXT HELP
                      	More about currently selected:

                	From the creators of BackTrack
			comes Kali Linux, the most advanced
			and versatile penetration testing
			distribution ever created. BackTrack
			has grown far beyond its humble
			roots as a live CD and has now become
			a full-fledged operating system. 
ENDTEXT
  5. Create the file "/boot/menus/kali.cfg", copy the following contents, and save the file
    Code:
    menu background	/kali/isolinux/splash.png
menu color title	* #FFFFFFFF *
menu color border	* #00000000 #00000000 none
menu color sel		* #ffffffff #76a1d0ff *
menu color hotsel	1;7;37;40 #ffffffff #76a1d0ff *
menu color tabmsg	* #ffffffff #00000000 *
menu color help		37;40 #ffdddd00 #00000000 none
menu vshift		16
menu rows		6
menu helpmsgrow	10
menu helpmsgrow	11
# The command line must be at least one line from the bottom.
menu cmdlinerow	12
menu timeoutrow	12
menu tabmsgrow	14
menu tabmsg Press ENTER to boot or TAB to edit a menu

MENU TITLE KATANA - Kali

label live-686-pae
	menu label ^Live (686-pae)
	menu default
	linux /kali/live/vmlinuz
	initrd /kali/live/initrd.img
	append boot=live noconfig=sudo username=root hostname=kali noswap live-media-path=/kali/live/ live-media=removable

label live-686-pae-failsafe
	menu label ^Live (686-pae failsafe)
	linux /kali/live/vmlinuz
	initrd /kali/live/initrd.img
	append boot=live config memtest noapic noapm nodma nomce nolapic nomodeset nosmp nosplash vga=normal noswap live-media-path=/kali/live/ live-media=removable

label live-forensic
	menu label ^Live (forensic mode)
	linux /kali/live/vmlinuz
	initrd /kali/live/initrd.img
	append boot=live noconfig=sudo username=root hostname=kali noswap noautomount live-media-path=/kali/live/ live-media=removable

LABEL back
MENU LABEL ..
KERNEL /boot/vesamenu.c32
APPEND /boot/menus/main.cfg
TEXT HELP
Back to Main Menu
ENDTEXT


Using these steps works for adding other distros to Katana 2.0 as well. Be sure to read the Kali documentation on additional features like persistence. I hope this helps, and enjoy!