Comment 3 for bug 1155704

PS there is also no /boot/grub/grub.cfg file created. So it looks like none of the diskimage setup is happening.

The wubildr-disk.cfg file (looks normal):
loopback loop0 /ubuntu/disks/root.disk
set root=(loop0)
search --set=diskroot -f -n /ubuntu/disks/root.disk
probe --set=diskuuid -u $diskroot
linux /vmlinuz root=UUID=$diskuuid loop=/ubuntu/disks/root.disk preseed/file=/ubuntu/install/preseed.cfg wubi-diskimage ro quiet splash
initrd /initrd.img
boot