boot-update does not create a GRUB menu for dual boot.

All mount points exist and they are mounted :

/dev/sda1 on /boot type ext2 (rw,noatime)
/dev/sda7 on /mnt/gentoo type btrfs (rw,subvol=@root)
/dev/sda6 on /mnt/gentoo/boot type ext2 (rw)

/etc/boot.conf contents as per man :

boot {
generate grub
default "Funtoo Linux Xfce4"
timeout 3
}

"Funtoo Linux Xfce4" {
kernel vmlinuz[*-gentoo]
}

"Gentoo Linux" {
scan /mnt/gentoo/boot
kernel vmlinuz[-v]
params root=/dev/sda7
}

boot-update :

boot-update 1.6.7 /
Copyright 2009-2012 Funtoo Technologies

[use option "-l" for license info, "-h" for help]

• Generating config for grub...

DEFAULT > Funtoo Linux Xfce4 - vmlinuz-3.6.6-gentoo
Gentoo Linux - vmlinuz-3.6.5

• Completed successfully.