Indeed, Jeff's diagnosis is correct. To quote from my analysis of bug
160796:

The problem here seems to be that console-setup isn't in the read-only file 
system on the live CD, and so ubiquity has to install it in a context where it 
isn't quite prepared to do so. In Hardy, this should be fixed because ubiquity 
will instead queue it for installation
and install it when it actually is ready:

ubiquity (1.7.7) hardy; urgency=low

[...]
  [ Colin Watson ]
  * Prevent apt-install from installing packages directly unless
    install_extras has been run (previously, it would do so once apt was
    configured, which produced some confusing error messages).
[...]

 -- Evan Dandrea <[EMAIL PROTECTED]>  Wed, 13 Feb 2008 15:03:15 -0500

** Changed in: ubiquity (Ubuntu)
       Status: Confirmed => Fix Released

-- 
Error while installing GRUB under nUbuntu
https://bugs.launchpad.net/bugs/73849
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