I had pretty much the same error. And, it seems to be because my DVD-Rom drive is fairly old, and can't handle the data stream the way that it's being read...
I copied the two parts of the archive to the HD and ran cat linux-mce* | gunzip -c | tar xvf and that worked OK, Where the same command failed when the archive was on the DVD. Unfortunately I don't know what steps need to be done after that.
So, I'm starting to install kubuntu, and will proceed with the CD install method.
BTW: The next version WONT!! force me to reinstall from scratch RIGHT???