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Thanks for attempting to report a bug and trying to make Ubuntu even better. The version of update-initramfs that you likely have installed on your system is unable to work on a persistent USB stick. There is good news though! There is an updated version of the casper package will resolve this issue. You can install the updated version via the following commands:

    sudo apt-get update
    sudo apt-get install casper

After performing those steps try the software update or package installation that you were initially trying and it should work. Thanks!