Perhaps the message from the Bug Bot is poorly worded however in the log
file all we have is the following to go on:

update-initramfs: deferring update (trigger activated)
lzma: Encoder error: -2147467259
dpkg: error processing watershed (--configure):
 subprocess installed post-installation script returned error exit status 1

Which isn't helpful in determining in what went wrong with the package
installation.  The lzma error message -2147467259 can happen for a lot
of reasons.  Until lzma is made more informative there isn't much we can
do with these bug reports and this is why I made it a duplicate of bug
691985.

One thing to further test this might be to manually try installing the
downloaded watershed package and see what happens.  For what its worth I
tried recreating this by setting up a persistent USB stick with a Natty
ISO from 20110413 and was unsuccessful - I was able to install watershed
without a problem.

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https://bugs.launchpad.net/bugs/730915

Title:
  package watershed 5 failed to install/upgrade: subprocess installed
  post-installation script returned error exit status 1

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