Comment 5 for bug 556167

The problem is that parted treats local files (as used by vmbuilder) differently from "actual" disk files, and changes the sector size accordingly (without an option to change it). As a result, the partition start locations are too small for grub2 to install. I had originally reproduced this by using vmbuilder to install Ubuntu, and then attempting to update to grub2, which would fail, since there wasn't enough room.

My previously attached hack/work-around for vmbuilder was to skip a sector when building the first partition.