Found a workaround thanks to this guy:
http://jaredforsyth.com/content/unetbootin-failed-unmount-cdrom

I just opened up a terminal window and ran:
sudo umount -l -r -f /cdrom

I did this right after the "Who are you" window, before the "Installing
System" window.

-- 
Jaunty, Karmic: when booting from one partition and installing to another, 
installer fails to unmount '/cdrom' this halts installation.
https://bugs.launchpad.net/bugs/313452
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