Comment 10 for bug 685017

The way we determined it as an out of space issue, is Sarvatt reproduced your problem on a USB stick by manually installing nvidia, and got the error message that way:

<Sarvatt> Setting up initramfs-tools (0.98.1ubuntu7) ...
 update-initramfs: deferring update (trigger activated)
 lzma: Encoder error: -2147467259
 dpkg: error processing initramfs-tools (--configure):
  subprocess installed post-installation script returned error exit status 1
 after sudo apt-get install nvidia-current from a terminal

He wasn't able to find the error message in any logs. Typical places to look would be /var/log/dpkg.log or the make.log (found a couple levels deep under /var/lib/dkms). You might poke around in your /var/log/ to see if you can find an error message which indicates a problem other than disk usage.

lzma error "-2147467259" means "no space to unpack the archive". See bug #562312 as another example.

There is a possibility that you're not actually truly out of space at all, it's just that the installer *thinks* there's not enough. Some further analysis is needed to pinpoint the exact steps to reproduce the issue. If you could do some additional testing to identify the steps, that'd help move things forward faster.