Ubuntu – Ubuntu Server 11.10 boot, white terminal with garbled black text

Your Grub file seems ok. I suggest installing Grub2 manually again. First, start Ubuntu from USB stick and do not mount your installed Ubuntu. Open a terminal and apply those commands:

sudo mount /dev/sda1 /mnt
sudo mount --bind /dev /mnt/dev
sudo mount --bind /dev/pts  /mnt/dev/pts
sudo mount --bind /proc /mnt/proc
sudo mount --bind /sys  /mnt/sys
sudo chroot /mnt
grub-install --force /dev/sda

You can check if it is OK or not with:

grub-install --recheck --force /dev/sda

If everything is ok, unmount all the things and quit:

exit
sudo umount /mnt/dev/pts
sudo umount /mnt/dev
sudo umount /mnt/proc
sudo umount /mnt/sys
sudo umount /mnt
sudo reboot

To remove a new linux kernel version (for example linux-image-3.2.0-64-generic), use the following command:

sudo apt-get purge linux-image-3.2.0-64-generic linux-headers-3.2.0-64-generic linux-headers-3.2.0-64

This command will remove the kernel and associated headers and then update the GRUB boot loader. Subsequent boots will use the most recent previous kernel version on your system.

With kubuntu 12.04 and linux-image-3.2.0-64-generic I discovered that my windows applications would no longer run using crossover office. Hence I downgraded to 3.2.0-63.