No, 2TB is not too big (just!) for traditional partition tables and ext3... the DVD is supposed to create this partition table then create the necessary file systems/partitions under it. It obviously isn't even getting that far. I would suggest you have a hardware issue with your BIOS/mobo/SATA chipset... maybe that this board is just not compatible with Kubuntu 0710.
If you have a copy of Kubuntu 0710 Live CD (difficult to get now, but not impossible), try booting with that and then choosing to install permanently on that HDD. This should at least tell you at the next reboot whether 0710 has the right drivers to run that mobo. If it fails, then likely you will either have to play around with the BIOS settings for SATA, or the boot-time APIC/ACPI settings; failing that, perhaps waiting for LMCE 0810 to come out as this will have much more recent hardware drivers.