same problem here doing a fresh install on a IBM X40 (gutsy alternate rc iso, 
booting from usb using hd-media from "[..]/current/[..]/hd-media"):
installation goes fine till xorg is installed (textmode terminal), then the 
terminal switches to graphics-mode and these colorized unreadable blocks are 
displayed (the before posted screenshot shows it).

this is a showstopper!

-- 
Alternate install of Tribe-4 corrupts video display when installing packages 
(affected hardware includes Santa Rosa)
https://bugs.launchpad.net/bugs/127008
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