Workaround:
Wait until you get the error, then go to tty4 (alt+f4) where you see the error log. It says:
Cannot find /lib/modules/2.6.32-21-generic
Then go to tty2 (alt+f2), press enter to get a root shell and run this command
~# cp -a /lib/modules/2.6.32-21-generic/ /target/lib/modules/2.6.32-21-generic/
I guess setting up initramfs-tools is not running in the current system, but in a chrooted one.
Workaround:
Wait until you get the error, then go to tty4 (alt+f4) where you see the error log. It says:
Cannot find /lib/modules/ 2.6.32- 21-generic
Then go to tty2 (alt+f2), press enter to get a root shell and run this command
~# cp -a /lib/modules/ 2.6.32- 21-generic/ /target/ lib/modules/ 2.6.32- 21-generic/
I guess setting up initramfs-tools is not running in the current system, but in a chrooted one.