I did a clean install after this, and got no messages like that again

While I don't have my new hardware yet, I thought I would give the update a try.
I did the apt-get update and the apt-get upgrade, reboot, deleted the image for the eee-box and started the box....and got exactly the same result
Just to make sure, I did the fresh install from scratch...but nothing changed. I still get the infamous kernel-panic.
I'm still open for suggestions
In case this is of any interest, here is what lspci says on my core, which is otherwise running 7.10:

00:00.0 Host bridge: VIA Technologies, Inc. VT8385 [K8T800 AGP] Host Bridge (rev 01)
00:01.0 PCI bridge: VIA Technologies, Inc. VT8237 PCI bridge [K8T800/K8T890 South]
00:05.0 RAID bus controller: Silicon Image, Inc. SiI 3114 [SATALink/SATARaid] Serial ATA Controller (rev 02)
00:06.0 RAID bus controller: American Megatrends Inc. MegaRAID (rev 02)
00:08.0 Multimedia video controller: Conexant Systems, Inc. CX23880/1/2/3 PCI Video and Audio Decoder (rev 05)
00:08.1 Multimedia controller: Conexant Systems, Inc. CX23880/1/2/3 PCI Video and Audio Decoder [Audio Port] (rev 05)
00:08.2 Multimedia controller: Conexant Systems, Inc. CX23880/1/2/3 PCI Video and Audio Decoder [MPEG Port] (rev 05)
00:08.4 Multimedia controller: Conexant Systems, Inc. CX23880/1/2/3 PCI Video and Audio Decoder [IR Port] (rev 05)
00:0a.0 Ethernet controller: Realtek Semiconductor Co., Ltd. RTL-8139/8139C/8139C+ (rev 10)
00:0b.0 Ethernet controller: Realtek Semiconductor Co., Ltd. RTL-8169 Gigabit Ethernet (rev 10)
00:0f.0 IDE interface: VIA Technologies, Inc. VT82C586A/B/VT82C686/A/B/VT823x/A/C PIPC Bus Master IDE (rev 06)
00:10.0 USB Controller: VIA Technologies, Inc. VT82xxxxx UHCI USB 1.1 Controller (rev 81)
00:10.1 USB Controller: VIA Technologies, Inc. VT82xxxxx UHCI USB 1.1 Controller (rev 81)
00:10.2 USB Controller: VIA Technologies, Inc. VT82xxxxx UHCI USB 1.1 Controller (rev 81)
00:10.3 USB Controller: VIA Technologies, Inc. VT82xxxxx UHCI USB 1.1 Controller (rev 81)
00:10.4 USB Controller: VIA Technologies, Inc. USB 2.0 (rev 86)
00:11.0 ISA bridge: VIA Technologies, Inc. VT8237 ISA bridge [KT600/K8T800/K8T890 South]
00:11.5 Multimedia audio controller: VIA Technologies, Inc. VT8233/A/8235/8237 AC97 Audio Controller (rev 60)
00:18.0 Host bridge: Advanced Micro Devices [AMD] K8 [Athlon64/Opteron] HyperTransport Technology Configuration
00:18.1 Host bridge: Advanced Micro Devices [AMD] K8 [Athlon64/Opteron] Address Map
00:18.2 Host bridge: Advanced Micro Devices [AMD] K8 [Athlon64/Opteron] DRAM Controller
00:18.3 Host bridge: Advanced Micro Devices [AMD] K8 [Athlon64/Opteron] Miscellaneous Control
01:00.0 VGA compatible controller: nVidia Corporation NV34 [GeForce FX 5200] (rev a1)

interestingly I can ping the md from the core....

same  happened here...

Just 30 minutes ago I finished another install from the scratch. I really was hopeful, when I came back from my vacation, as I  read about the huge update. I am truly sorry to report, that the problem remains the same for me
At first it seemed as if it might be okay:

r8169: eth0: link down
r8169: eth0: link down
r8169: eth0: link up

then a few lines later this:

IP-Config: no response after 60 secs- giving up
/init: .: line 1: can't open /tmp/net-eth0.conf
Kernel panic - not syncing: Attempted to kill init!

So...I don't know..perhaps I'm just stupid, or something...if I can provide any information...logfiles or whatever, please tell me and I will provide it.
thanks
-------------------------------------------
since nobody seems to have any idea what causes this, I will start changing the hardware in my core soon. Right now I'm acquiring a new mainboard -asus m2n sli deluxe- it has two nvidia nics onboard, so I'm hoping to bypass any confusion with eth0 and eth1. Other than that I'planning of putting a athlon 7750+ x2 2 gbyte ram and a nvidia9400gt in it. That should settle me for the foreseeable future.

That sounds great. I have just reinstalled kubuntu 8.10 did the aptitude updates as well as aptitude dist-upgrade.

So if you guys give me a green light, I will continue the install.

check this out : http://forum.linuxmce.org/index.php?topic=8543.0
I got my card running- my card is actually only a reduced version of yours- so this should work nicely on your machine.

thats fine by me

I'd have no problem setting it all up again, if needed. I also want to get the thing going. If we find out what goes wrong on my end, perhaps we can safe some poor sods out there, who might run in the same problem. However I will start by getting another Kubuntu image from an english mirror. I don't know if there is any kind of localisation or deviation from the standard on the german sources.

I followed the instructions, as they were written down
aptitude update
aptitude dist-upgrade
then I did a reboot, downloaded the script, unpacked it and let them run in the prescribed order

hmm...I'm beginning to get superstitious. Perhaps I should download Kubuntu again. I downloaded it from a german mirror, maybe there is something up with that. I simply don't know whatelse could cause this.

The RaLink device is probably the wireless adapter...I switched mine off since I updated the BIOS last week. Before this option wasn't available.

perhaps my choice of words was not quite right: I cannot create an account to login to the wiki (since my forum-login wouldn't work for the wiki´)

I would like to make the change, but I cannot create an account to login to the wiki. I fill out the form and submit, but I get an error message about missing information
it also says :"This reCAPTCHA key isn't authorized for the given domain"

Ok, last night I made a clean install - twice actually. When setting up Kubuntu it always recognized my nics in the wrong order. That has never been a problem, since I could later change it in the webadmin of linuxmce. However last night it caused trouble right in the middle of ./mce-install.sh, when suddenly ip-adresses did not get resolved anymore. So I quickly swapped the cables and after I restarted the script it when through. The next problem was with Orbiter-generation for the hybrid. It crashed and went on without actually generating an orbiter, so I got a message, that the config for the orbiter could not be retrieved. I managed to login to the webadmin and enter the required information. it created an orbiter but could not connect to the dcerouter. just out of curiosity at this point I wanted to see what the eee-box would do. interestingly it went past the nic without a problem, but gave me a mount 13 error. since I could not get the orbiter to cooperate I decided to scrap it all again. What I thought was the critical change that might have gotten the eee-box running was, that I did a reboot after the aptitude dist-upgrade (which was not explicitly mentioned in the install instructions, but which made sense since you update the kernel). So I was full of hope and did it all over again, only this time connecting the internetcable to the right nic, so I would not need to restart the script. After the ./post-install.sh was finished, I just shutdown the core and went to bed. This morning I resumed, but now the eee-box just stubbornly does not want to start, no matter what I tried. Someone suggested to me I should update the kernel to 2.26.28, but I do not think this to be a good long term solution, since the final release of LMCE would not be based on this one. I really do not know what I should do. Is there some script I need to run or something...please let me know.

here is what lspci produced on my box

00:00.0 Host bridge: Intel Corporation Mobile 945GME Express Memory Controller Hub (rev 03)
00:02.0 VGA compatible controller: Intel Corporation Mobile 945GME Express Integrated Graphics Controller (rev 03)
00:02.1 Display controller: Intel Corporation Mobile 945GM/GMS/GME, 943/940GML Express Integrated Graphics Controller (rev 03)
00:1b.0 Audio device: Intel Corporation 82801G (ICH7 Family) High Definition Audio Controller (rev 02)
00:1c.0 PCI bridge: Intel Corporation 82801G (ICH7 Family) PCI Express Port 1 (rev 02)
00:1c.1 PCI bridge: Intel Corporation 82801G (ICH7 Family) PCI Express Port 2 (rev 02)
00:1c.2 PCI bridge: Intel Corporation 82801G (ICH7 Family) PCI Express Port 3 (rev 02)
00:1d.0 USB Controller: Intel Corporation 82801G (ICH7 Family) USB UHCI Controller #1 (rev 02)
00:1d.1 USB Controller: Intel Corporation 82801G (ICH7 Family) USB UHCI Controller #2 (rev 02)
00:1d.2 USB Controller: Intel Corporation 82801G (ICH7 Family) USB UHCI Controller #3 (rev 02)
00:1d.3 USB Controller: Intel Corporation 82801G (ICH7 Family) USB UHCI Controller #4 (rev 02)
00:1d.7 USB Controller: Intel Corporation 82801G (ICH7 Family) USB2 EHCI Controller (rev 02)
00:1e.0 PCI bridge: Intel Corporation 82801 Mobile PCI Bridge (rev e2)
00:1f.0 ISA bridge: Intel Corporation 82801GBM (ICH7-M) LPC Interface Bridge (rev 02)
00:1f.2 IDE interface: Intel Corporation 82801GBM/GHM (ICH7 Family) SATA IDE Controller (rev 02)
00:1f.3 SMBus: Intel Corporation 82801G (ICH7 Family) SMBus Controller (rev 02)
03:00.0 Ethernet controller: Realtek Semiconductor Co., Ltd. RTL8111/8168B PCI Express Gigabit Ethernet controller (rev 02)