Output on boot-up indicates something more going on here (testing on
lucid desktop and mythbuntu images).

/init: line 224: mountroot: not found
mount: mounting /dev on /root/dev failed: No such file or directory
mount: mounting /sys on /root/sys failed: No such file or directory
mount: mounting /proc on /root/proc failed: No such file or directory
Target filesystem doesn't have /sbin/init.
No init found. Try passing init= bootarg.

-- 
preseed is not getting loaded at boot
https://bugs.launchpad.net/bugs/518272
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