I am facing the same problem with the amd64 alternate install CD. The
only way I managed to get past this issue was by constantly modifying
/target/etc/apt/sources.list to a valid ubuntu http mirror. I am not
sure if the problem is that it is trying to look for _Karmic Koala_
instead of "Karmic Koala" when it tries configuring APT.

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9.10 Server i386: Installation step failed .. failing step is: Select and 
install software
https://bugs.launchpad.net/bugs/478754
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