I ran into that one as well when installing Ubuntu 12.04.  I tried using
a BTRFS as file system for the root mountpoint (/).  I solved my trouble
by using EXT4 again.

Seems like grub cannot handle BTRFS yet :-/

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https://bugs.launchpad.net/bugs/916077

Title:
  Incorrect default GRUB installation target when /boot is on LVM

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