Thanks for your bugreport. The problem here is that the desktop CD should not contain a upgrade script as it does only contain a very limited pacakge selection.
I will attach a patch.
Cheers,
Michael
** Also affects: debian-cd (Ubuntu)
Importance: Undecided
Status: Unconfirmed
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ubuntu-minimal cannot be found - herd 4 upgrade fails
https://launchpad.net/bugs/86133
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