Boot Drops to Shell if external hdd is connected (pae image)

Binary package hint: linux-image-generic-pae

The boot process drops to busybox when I have an external hdd attached via usb, Please note that I have a Wubi install. If I remove the external hdd, ubuntu boots normally and nothing else malfunctions if I plus the hdd in after boot.

ProblemType: Bug
DistroRelease: Ubuntu 10.10
Package: linux-image-generic-pae (not installed)
Regression: Yes
Reproducible: Yes
ProcVersionSignature: Ubuntu 2.6.35-28.49-generic-pae 2.6.35.11
Uname: Linux 2.6.35-28-generic-pae i686
AlsaVersion: Advanced Linux Sound Architecture Driver Version 1.0.23.
Architecture: i386
AudioDevicesInUse:
 USER PID ACCESS COMMAND
 /dev/snd/controlC0: dylan 1946 F.... pulseaudio
 /dev/snd/controlC1: dylan 1946 F.... pulseaudio
CRDA: Error: [Errno 2] No such file or directory
Card0.Amixer.info:
 Card hw:0 'Intel'/'HDA Intel at 0xf0700000 irq 45'
   Mixer name : 'Conexant CX20561 (Hermosa)'
   Components : 'HDA:14f15051,10250253,00100000'
   Controls : 14
   Simple ctrls : 7
Card1.Amixer.info:
 Card hw:1 'default'/'Burr-Brown from TI USB Audio CODEC at usb-0000:00:1a.0-1, full s'
   Mixer name : 'USB Mixer'
   Components : 'USB08bb:29b0'
   Controls : 2
   Simple ctrls : 1
Date: Tue Mar 22 20:16:41 2011
InstallationMedia: Ubuntu 10.10 "Maverick Meerkat" - Release i386 (20101007)
MachineType: Acer Extensa 5635Z
ProcCmdLine: BOOT_IMAGE=/boot/vmlinuz-2.6.35-28-generic-pae root=/dev/sda2 loop=/hostname/disks/root.disk ro quiet splash
ProcEnviron:
 LANG=en_US.utf8
 SHELL=/bin/bash
RelatedPackageVersions: linux-firmware 1.38.4
RfKill:
 0: phy0: Wireless LAN
  Soft blocked: no
  Hard blocked: no
SourcePackage: linux
dmi.bios.date: 08/06/2009
dmi.bios.vendor: Phoenix
dmi.bios.version: V0.3219
dmi.board.name: BA50-MV
dmi.board.vendor: Acer
dmi.board.version: Not Applicable
dmi.chassis.type: 10
dmi.chassis.vendor: Acer
dmi.chassis.version: N/A
dmi.modalias: dmi:bvnPhoenix:bvrV0.3219:bd08/06/2009:svnAcer:pnExtensa5635Z:pvrNotApplicable:rvnAcer:rnBA50-MV:rvrNotApplicable:cvnAcer:ct10:cvrN/A:
dmi.product.name: Extensa 5635Z
dmi.product.version: Not Applicable
dmi.sys.vendor: Acer