I think this is caused by the link to vmlinuz which, in a USB install,
is a broken link.   See bug #557023.

I fixed this by recreating the link as follows:

sudo rm /vmlinuz

sudo ln -s /cdrom/casper/vmlinuz vmlinuz

Then the installs were fine.

-- 
package initramfs-tools 0.92bubuntu78 [modified: usr/sbin/update-initramfs] 
failed to install/upgrade: subprocess installed post-installation script 
returned error exit status 1
https://bugs.launchpad.net/bugs/571892
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