Thanks for your bugreport.
I can reproduce this with ubuntu 7.10 server image from isv-
images.ubuntu.com (fully up-to-date).
** Changed in: update-manager (Ubuntu)
Importance: Undecided => High
Status: New => Confirmed
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Internal Error, Could not perform immediate configuration (2) on libpam0g
https://bugs.launchpad.net/bugs/217435
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