So you have a DMG that is a proper image, but every time you attempt a restore with the disk utility it fails with ‘invalid argument’ ‘unable to scan’ or ‘idontlikeyouthatway’.
Good old Disk Utility used to be powerful right?
So it turns out that you CAN restore that disk image with using the Terminal in OSX and ignore the busted Disk Utility altogether.
This is the syntax:
sudo asr -noverify -source source -target target -erase
I had formatted my USB flash drive to take the 106.dmg image, heres a screenie of Terminal doing the work that Disk Util cant.