I can confirm Brad Clarke’s observation: When doing the upgrade on 10.04
Server 64bit in a virtual machine, I’m also stuck in that loop.

I actually don’t know why I’m asked that question at all, because I
chose to install grub to the MBR during installation. So why doesn’t
grub just update the installation?

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Option 'No' at question 'Continue without installing GRUB?' does nothing. 
Forced to answer 'Yes'.
https://bugs.launchpad.net/bugs/580408
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