Seems I get hit by this on trying to install 7.04 desktop via live CD.
I disabled removable media auto-mounting and applied 
https://bugs.launchpad.net/ubuntu/+source/ubiquity/+bug/99908/comments/4, no 
luck.

>From syslog:
May 23 13:25:31 ubuntu partman: /dev/hda1 is mounted; will not make a 
filesystem here!

I used mount to check no partition was mounted right before hitting
install.

Guess will try alternate.

-- 
The ext3 file system creation in partition #1 of SCSI1 (0,0,0) (sda) failed.
https://bugs.launchpad.net/bugs/99908
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