You seem to have two desktop metapackages installed which creates a difficult situation for the release upgrader.
2016-09-09 21:39:36,763 DEBUG MetaPkgs: kubuntu-desktop ubuntu-desktop
...
2016-09-09 21:40:16,010 DEBUG Marking 'ubuntu-desktop' for upgrade
2016-09-09 21:40:16,156 DEBUG Marking 'kubuntu-desktop' for upgrade
2016-09-09 21:40:16,647 DEBUG metapkg 'ubuntu-desktop' installed but marked_delete
2016-09-09 21:40:16,647 DEBUG metapkg 'ubuntu-desktop' installed but marked_delete
2016-09-09 21:40:16,713 DEBUG blacklist expr 'ubuntu-desktop$' matches 'ubuntu-desktop'
2016-09-09 21:40:16,713 DEBUG The package 'ubuntu-desktop' is marked for removal but it's in the removal blacklist
2016-09-09 21:40:16,782 ERROR Dist-upgrade failed: 'The package 'ubuntu-desktop' is marked for removal but it is in the removal blacklist.'
You seem to have two desktop metapackages installed which creates a difficult situation for the release upgrader.
2016-09-09 21:39:36,763 DEBUG MetaPkgs: kubuntu-desktop ubuntu-desktop
...
2016-09-09 21:40:16,010 DEBUG Marking 'ubuntu-desktop' for upgrade
2016-09-09 21:40:16,156 DEBUG Marking 'kubuntu-desktop' for upgrade
2016-09-09 21:40:16,647 DEBUG metapkg 'ubuntu-desktop' installed but marked_delete
2016-09-09 21:40:16,647 DEBUG metapkg 'ubuntu-desktop' installed but marked_delete
2016-09-09 21:40:16,713 DEBUG blacklist expr 'ubuntu-desktop$' matches 'ubuntu-desktop'
2016-09-09 21:40:16,713 DEBUG The package 'ubuntu-desktop' is marked for removal but it's in the removal blacklist
2016-09-09 21:40:16,782 ERROR Dist-upgrade failed: 'The package 'ubuntu-desktop' is marked for removal but it is in the removal blacklist.'
Please try removing one and then upgrading.