Comment 2 for bug 2051594

The log output shows that you have pam_tally or pam_tally2 in your pam configuration. The preinst fails in order to save you from upgrading and breaking your system, leaving you with a configuration referencing an obsolete pam module.

The message says:

 you are using pam_tally or pam_tally2 in your configuration

 The pam_tally and pam_tally2 modules have been removed from PAM. You are using one of these
 modules in your PAM configuration in /etc/pam.d. You must remove the uses of these modules
 before PAM can be upgraded; including these modules in your PAM configuration after the
 upgrade will stop users from being able to log into the system.

 Consider the pam_faillock module as a replacement for pam_tally.

The fact that this message was shown to you via the pam preinst script also indicates that you were not using ubuntu-release-upgrader, the recommended way to upgrade between Ubuntu releases. On servers, please upgrading using 'sudo do-release-upgrade'. On desktops, please use 'update-manager'.