I ran into this problem recently installing 2010.12 LXDE. The problem also exists in 2010.12 KDE and 2010.07 LXDE. I was installing on a desktop machine with an old Mandriva install, and a Win98 partition I had forgotten was even there. I wanted to wipe the disk and start fresh.
The installer ran fine until the partitioning step. Whether I told it to use the entire disk or to do custom partitioning, it would say the partitioning was successful, but then tell me I had to exit the installer and restart. Restarting the installer and rebooting the live CD did not help. When I got back to the partitioning step, my old partitions were always still there.
Of course I could have just booted Parted Magic and repartitioned, but I wanted to figure out what was going wrong. Eventually I discovered that when I boot the live CD, it automatically mounts the Windows partition (with no obvious notification). The mounted partition was causing the write of the new partition table to fail. When I unmounted that partition first, everything went as it should.
So it seems that the installer has a small bug in that it reports successful partitioning when the partitioning has in fact failed. If it had told me it couldn't proceed because of a mounted partition it would not have take so long to solve this.
Also, I am not sure why the Windows partition gets mounted automatically. Perhaps there is a good reason for this (to make it easier for those just coming from Windows to try things out?), but it has an unintended consequence. Of course, if I had told it to use the existing partitions, it probably would have been okay.
I suspect that this was the root cause of the "Won't install" thread on Jan. 13 that was solved by wiping the disk.
Anyway, I just wanted to report this in case others run into it.