It was the second time that I’ve come across this error message (on a different machine). The previous time I just used the alternate install CD that allows you to perform certain specialist installations. Since this time a had not a spare empty CD I looked for a workaround. So here is it:

Run the liveCD and prior to the installation open a terminal console (Applications>Accessories>Terminal). Open the validation.py file for edit:

sudo gedit /usr/lib/ubiquity/ubiquity/validation.py
Replace:
if not root:
result add(MOUNTPOINT_NOROOT)
with:
if not root:
pass

That’s all. You can now run the installer.
(source: http://www.ubuntuforums.org/showpost.php?p=1700787&postcount=29 )

Check here.