I had similar problem. 2.6.21-rc3 from kernel.org works for me. Config is attached. It is experimental and just for testing. Hope this helps.
** Attachment added: "config for testing 2.6.21-rc3" http://librarian.launchpad.net/6720909/config-2.6.20.1 -- 7.04 herd 5 liveCD will not boot https://launchpad.net/bugs/89380 -- ubuntu-bugs mailing list ubuntu-bugs@lists.ubuntu.com https://lists.ubuntu.com/mailman/listinfo/ubuntu-bugs