Thanks for this additional information.
It looks like this is caused by (a older version) of envy. It used to
nvidia-glx with very high version numbers. I close it now based on your
description that the problem is fixed after you removed nvidia-glx
** Changed in: update-manager (Ubuntu)
Status: Triaged => Fix Released
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Update manager fails [gutsy->hardy]- an unresolvable problem occurred while
calculating the upgrade
https://bugs.launchpad.net/bugs/215554
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