Thanks for following up. The logs file are not the one from the original
report, so it make it impossible to track down the bzip2 issue.

However you've got the following errors:
1. Network error
====
'Failed to fetch 
http://gb.archive.ubuntu.com/ubuntu/pool/main/l/linux/linux-headers-2.6.24-21_2.6.24-21.42_all.deb
 Could not connect to gb.archive.ubuntu.com:80 (194.169.254.10). - connect (101 
Network is unreachable)
====
Means you've been hit by a network error , nothing we can do here.

2. xserver-xorg error
=====
Setting up xserver-xorg (1:7.3+10ubuntu10.2) ...
No protocol specified
Gtk-WARNING **: cannot open display: :0.0 at 
/usr/share/perl5/Debconf/FrontEnd/Gnome.pm line 60.
dpkg: error processing xserver-xorg (--configure):
 subprocess post-installation script returned error exit status 1
=====

3. And finally and update-manager error 
====
Traceback (most recent call last):
  File "logging/__init__.py", line 753, in emit
    self.flush()
  File "logging/__init__.py", line 731, in flush
    self.stream.flush()
IOError: [Errno 9] Bad file descriptor
Traceback (most recent call last):
  File "logging/__init__.py", line 753, in emit
    self.flush()
  File "logging/__init__.py", line 731, in flush
    self.stream.flush()
IOError: [Errno 9] Bad file descriptor
Traceback (most recent call last):
  File "logging/__init__.py", line 753, in emit
    self.flush()
  File "logging/__init__.py", line 731, in flush
    self.stream.flush()
IOError: [Errno 9] Bad file descriptor
====
Probably due to the failing xserver-xorg.

Affecting to xorg because this is the only obvious failure from your log
files.

Thank you.

** Changed in: xorg (Ubuntu)
Sourcepackagename: bzip2 => xorg
       Status: Incomplete => New

-- 
package libbz2-1.0 1.0.4-2ubuntu4 failed to install/upgrade: cannot access 
archive
https://bugs.launchpad.net/bugs/286676
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