I recently upgraded from Snow Leopard to Mountain Lion, so I could put it on a bootable USB using a program. When I tried, it said that Mountain Lion was not found in applications, and I could not move it into applications because it was not found.
From the description of your problem I'm going to guess you are trying to use Lion DiskMaker. If that is the case then this hopefully will help with your issue and if it is not the case, here is another possibility for making a bootable USB drive.
Lion DiskMaker looks for the install image you downloaded from the App Store when you upgraded. The problem is that when you upgrade the install application removes the install image once it is complete. Good news is you can go into the App Store and download the install image again. Once the image is downloaded it will be located in /Applications. Now Lion DiskMaker will locate the image when you go to create the USB device.
Below are a couple of links for more information and clarification on the software.
I can't exactly follow the problem you are describing. But the error message which you report here does not seem familiar to me:
My problem with this message is that the Mountain Lion installer application - which you downloaded from the App Store - is not required to create a Recovery USB after having upgraded to Mountain Lion. Hence, the application is removed.
Here's a guide on how to create a Recovery USB in (Mountain) Lion:
Apple's Recovery Disk Assistant
...enables you to create a recovery USB. While this recovery USB does not contain the installer image, it is still able to install Mountain Lion.
You can download the official software from Apple here. Note that you can create the recovery USB only if you have a
The Recovery Disk Assistant requires just 1GB because is does not store an OS X installer image (usually named
You are still able to use the recovery USB without internet access if you just want to open Disk Utility from it for example.