Grenade got patched. Bummer.
So, this is a story related achievement. It's buggy for some people (like a lot of achievements), although it seems to be buggier in coop than in solo.
Not related to this achievement, but an important point about something around the same time as this achievement...
A story mission around this time is called Going Rogue. Once you've completed Going Rogue, you can complete a mission called Raiders of the Lost Rock. Do this mission.
DO NOT SELL THE GRENADE YOU GET FROM THE MISSION. You can't get it later.
The grenade is called the Porcelain Pipe Bomb, and a direct hit from it will pretty much eat through anything. It works really well on the boss at the end of Cold As The Grave.
Get the grenade. Melt enemies. Enjoy.