Thanks a lot Steve, 
Everything was exactly as you wrote. The kernel was on menu.lst and instaling 
grub-pc and grub2 did help. 
It hangs during boot for some reason and I never got a chance to use it, but 
this problem is solved. Thank you!

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After upgraded to 10.04 from previous though usplash was autoremoved as a 
package it STILL loads during boot time !!! Don want both plymouth and usplash 
together!
https://bugs.launchpad.net/bugs/542462
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