I'm running into a very similar problem. I've actually got two different USB keys of different makes (one with 10.04 Desktop and one with 10.04 Netbook Remix) that are proven to work in 5 other computers. I've been getting the exact same "no default or UI configuration directive found" with both keys on one unit that I'm trying to get Ubuntu on. I also followed the directions to create the USB key from within Ubuntu. When I boot with that key, I get this message:
When I hit enter, it says: "could not find kernel image: linux"
SYSLINUX 3.63 Debian-2008-07-15 CBIOS Copyright (C) 1994-2008 H. Peter Anvin
So apparently, it's a similar error no matter how the USB booter is created. Any ideas? Since the USB keys have always worked well, I've never bothered to make an actual CD. I guess I'll try that, but I'd also really like to figure out why the heck the USB keys won't work with this one particularly stubborn unit.