Yeah I can reproduce this by creating a liveusb with the persistent
storage space slider maxed out, it requires space on the fat32 file
system to manipulate the initramfs.

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https://bugs.launchpad.net/bugs/685017

Title:
  Jockey should warn on insufficient disk space in LiveCD environment, else get 
error "package nvidia-current 260.19.21-0ubuntu1 failed to install/upgrade: 
subprocess installed post-installation script returned error exit status 1"

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