>> Did you do the new feature on apt-get that removes unnecessary packages? If 
>> so, it seems it might have removed upstart.. this was another bug recently 
>> posted.
Make sure you have upstart package on your system to init the new kernels. You 
can use a livecd and chroot your filesystem if you are not able to currently do 
anything. <<

I can confirm this. I had the same error and my menu.lst was set up
fine. It was caused by an apt-get autoremove. Mounting a Ubuntu-livcd,
doing chroot, and doing an apt-get install ubuntu-minimal solved the
problem (apt-get install upstart was not enough!)

-- 
Kernel 2.6.17-7-generic fails to boot, I get the BusyBox instead
https://launchpad.net/bugs/59792

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