unable to find a medium containing a live file system

Have you tested your RAM?

Yes i've tested it.. Does ubuntu 10.04 needs 1GB RAM?

512Mb is enough

Have you tried maverick?

Try defaulting BIOS to failsafe settings

No i haven't tried maverick.. I have tried Kubuntu also, but same error.
Is there any problem with CD ROM? But i can boot WinXP from that..

You also tested the CD for defects once booted to so we know that works. Does the system have a floppy drive?

Yes i've tested the CD for defects.
Yes, there is a floppy drive in my desktop..

Could try: http://www.pendrivelinux.com/use-a-floppy-to-boot-usb-pendrive-linux/

Thanks, will try this method and give the result..
But is there any other alternate method?

That link states that it is obsolete.. Could you suggest me some other method? Is there any problem with my desktop configuration?

Yes, there is an alternative method. Create a GRUB rescue boot image by following the instructions at http://www.gnu.org/software/grub/manual/html_node/Making-a-GRUB-bootable-CD_002dROM.html#Making-a-GRUB-bootable-CD_002dROM. You will have to install the package called xorriso for this to work (you can install it in the Software Center). You do not need to include any "other files" in your image.

Then burn the newly created grub.iso to a CD (burn it the same way you burned the Ubuntu desktop install .iso to a CD). This is not as good as writing it to a floppy, but most 3.5" floppy disks have a capacity of 1.44 MB, which is too small for a grub.iso file created on a current system. (If you have a floppy drive, and floppy disks, that support up to 2.88 MB, you might try that.)

If that doesn't work, we can try to find a GRUB rescue floppy image file, even though--as you have pointed out--the one from the pendrivelinux project seems no longer to be available.

"Is there any problem with my desktop configuration?"

There could be a problem with your hardware (though you tested your RAM and it was fine, and RAM problems are the most common kind of hardware problem to cause this situation), or perhaps a bug in Ubuntu makes it incompatible with your hardware, when booting from the CD. The above method is a way to boot Ubuntu from a USB stick even on a computer that does not normally support booting from USB; it might make it possible for you to test and use Ubuntu. There is no guarantee that it will work, or that the Ubuntu system you install this way will work. You'd have just to try it and see.

To clarify, with the above method, you'll boot from the CD created from grub.iso and then follow the rest of the instructions at http://www.pendrivelinux.com/use-a-floppy-to-boot-usb-pendrive-linux/ to boot from a USB flash drive that you have written the Ubuntu .iso image to using the instructions at http://www.ubuntu.com/download/ubuntu/download (step 2, select "USB stick" and whatever OS you're going to use to create it, and click "Show me how").