try commenting out these lines:
deb http://archive.ubuntu.com/ubuntu/ edgy main restricted universe
deb-src http://archive.ubuntu.com/ubuntu/ edgy main restricted universe
deb http://security.ubuntu.com/ubuntu/ edgy-security restricted main universe
deb-src http://security.ubuntu.com/ubuntu/ edgy-security restricted main 
universe
deb http://archive.ubuntu.com/ubuntu/ edgy-updates restricted main universe
deb-src http://archive.ubuntu.com/ubuntu/ edgy-updates restricted main universe

Than afte ryou save and close /etc/apt/sources.list run sudo apt-get
update than you should beable to install from cdrom. while you have the
net repos enabled its going to look there for the packages instead of cd
rom. so comment out all net repos and try it it should be fine. Let me
know so i can close the bug.

-- 
Cannot Install Packages from CD and Need Internet Connection
https://launchpad.net/bugs/71964

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