The link /initrd.img is a dangling linkto /boot/initrd.img-2.6.27-1-generic
The link /vmlinuz is a dangling linkto /boot/vmlinuz-2.6.27-1-generic
Running postinst hook script /sbin/update-grub.
Searching for GRUB installation directory ...
No GRUB directory found. To create a template run 'mkdir /boot/grub' first. To install grub, install it manually or try the 'grub-install' command. ### Warning, grub-install is used to change your MBR. ###
So it seems something broke your grub? Can you tell us the contents of /boot, please?
Dear Victor, here's what I found at the bottom of your dpkgterminallog:
Setting up linux-image- 2.6.27- 2-generic (2.6.27-2.3) ...
Running depmod.
update-initramfs: Generating /boot/initrd. img-2.6. 27-2-generic
The link /initrd.img is a dangling linkto /boot/initrd. img-2.6. 27-1-generic
The link /vmlinuz is a dangling linkto /boot/vmlinuz- 2.6.27- 1-generic
Running postinst hook script /sbin/update-grub.
Searching for GRUB installation directory ...
No GRUB directory found. To create a template run 'mkdir /boot/grub' first. To install grub, install it manually or try the 'grub-install' command. ### Warning, grub-install is used to change your MBR. ###
So it seems something broke your grub? Can you tell us the contents of /boot, please?