text install: kernel selection failiure when sharring boot device

I beleive I have found an issue between live-installer and base-installer packages.
specifically in files live-installer.postinst (live-installer) and library.sh (base-installer)

I am using the quantal server iso and attempting a preseeded text based install
I notice that when installing from a brand new disk (a VM in this case), the kernel gets installed properrly in the target but when installing on a system sharing /boot with another installation, /target/boot/vmlinu* files exists and the kernel does not get installed in the target.

From what I could understand, starting from version 36ubuntu5, the live-installer.postinst script now uses this procedure

pick_kernel_if_missing () {
 for kernel in /target/boot/vmlinu*; do
  if [ -e "$kernel" ]; then
   info "Kernel already present ($kernel)"
   return
  fi
 done
 pick_kernel
}

From what I can tell, since /target/boot/vmlinu* exists,
pick_kernel never gets called thus the installer is never setting the KERNEL variable to some usefull value
also, these preseeded values neger get used:
base-installer/kernel/override-image
base-installer/kernel/image
base-installer/kernel/skip-install

Later when the procedure install_kernel is called, the KERNEL variable is empty and errors are loged

Mar 2 16:55:44 live-installer: update-initramfs: Generating /boot/initrd.img-3.5.0-17-generic
Mar 2 16:55:44 live-installer: grep: /boot/config-3.5.0-17-generic
Mar 2 16:55:44 live-installer: : No such file or directory
Mar 2 16:55:44 live-installer: WARNING: missing /lib/modules/3.5.0-17-generic
Mar 2 16:55:44 live-installer: Device driver support needs thus be built-in linux image!
Mar 2 16:55:44 live-installer: WARNING: Couldn't open directory /lib/modules/3.5.0-17-generic: No such file or directory
Mar 2 16:55:44 live-installer: FATAL: Could not open /lib/modules/3.5.0-17-generic/modules.dep.temp for writing: No such file or directory
Mar 2 16:55:44 live-installer: FATAL: Could not load /lib/modules/3.5.0-17-generic/modules.dep: No such file or directory
Mar 2 16:55:44 live-installer: FATAL: Could not load /lib/modules/3.5.0-17-generic/modules.dep: No such file or directory
Mar 2 16:55:44 live-installer: FATAL: Could not load /lib/modules/3.5.0-17-generic/modules.dep: No such file or directory
Mar 2 16:55:44 live-installer: FATAL: Could not load /lib/modules/3.5.0-17-generic/modules.dep: No such file or directory

Mar 2 16:55:47 base-installer: info: Kernel already present (/target/boot/vmlinuz-2.6.31-19-generic)
Mar 2 16:55:47 base-installer: warning: Failed to get debconf answer 'base-installer/kernel/linux/initrd'.
Mar 2 16:55:47 base-installer: info: Setting do_initrd='yes'.
Mar 2 16:55:47 base-installer: info: Setting link_in_boot='no'.