Good news:) I've managed to install the system yesterday. Only trouble is I've 
done 2 things and I'm not so sure which one of them actually cured my problem:
1. I found out that my BIOS is obsolete so I've upgraded it to its latest 
version
2. During the installation from the alternate CD for 11.04 Kubutnu (downloaded 
12.07.2010 around 5pm GMT) I've created a symlink (ln -s /cdrom/ /media/) in 
2nd terminal session.

The installation went flawlessly until the end, the new system booted
with no issues.

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https://bugs.launchpad.net/bugs/727783

Title:
  Installing packages from CD repository fails due to changed CD-ROM
  default mount point

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