I'm guessing this netbook has no optical drive? If not, and it's possible, I reckon installing ubuntu 10.10 from an optical drive will work. I have a small homeserver using an asus atom m-itx board and it always fails with similiar results to you if I try and install via usb memory stick or network. Via usb cd or sata cd it works fine. Borrow, beg or steal (don't actually steal anything it's a phrase) a usb cd drive and see how you get on maybe?