@Andreas, mount the usb disk in a different working linux installation,
and look at how much free disk space there is on the usb drive itself.
My guess is maybe it ran out of space while trying to create
vmlinuz-2.6.37-7-generic.  What % of the free space did you allocate to
reserve for documents and such?  If you set it to 100% then it does not
leave room for system files like initrd or the kernel, I guess.

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https://bugs.launchpad.net/bugs/685017

Title:
  Jockey should warn on insufficient disk space in LiveCD environment, else get 
error "package nvidia-current 260.19.21-0ubuntu1 failed to install/upgrade: 
subprocess installed post-installation script returned error exit status 1"

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