Putting Mountain Lion in the Applications folder 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.

Lion DiskMaker

Cult of Mac Instructions