Comment 156 for bug 930447

Remember, this is not a problem with ubuntu, but with syslinux. The penitum-M works just fine with a PAE kernel. Syslinux checks for the pae flag in the CPU (it does lack that) and thus fails to boot.

Hence why you can use grub instead of syslinux to boot and install it just fine (i wrote about it above somewhere). You could of course remove the check in syslinux (there's a bug report attached to this for that) and use that instead, but using grub (on a USB stick anyway) is just really easy.