The difference added in this +steamos1 package is the removal of the script lib/partman/finish.d/50fstab_removable_media_entries
This script is responsible for a few things, but critically, the creation of the cdrom fstab entry, as per:
populate_media cdrom udf,iso9660 user,noauto $CDDEVICES
Without this line, there is never an entry in /etc/fstab for mounting a cdrom - which is required for apt-cdrom to function. As a result, when the installer switches to the in-target installation of packages, it will fail to install any packages, instead prompting forever for a media change.
This problem is not an issue with the current (Feb 17th) installer image, with md5sum 7a502c258043afa9a18360988c82cc02, but will manifest itself as soon as a refreshed image containing the +steamos1 package is created.
I removed this entry because it was leaving stray fstab entries for USB storage because we added 'usbmount' support, which broke our Steam controller update process. Can you still install from USB with that version of partman?
USB install seems fine with +steamos1 package in an ISO when that ISO is imaged to USB. apt-cdrom-setup detects this scenario and does different things internally when the media is a USB stick, not requiring a cdrom entry in fstab. (see usr/lib/apt-setup/generators/40cdrom around line 40)
Fixed package at http://paste.ubuntu.com/7100578/
applied this fix but it doesn't appear to be working, #166
Okay, that's more than a little weird. I'll do some testing later with the new Valve ISO release
Missing +x permission on the script.
If I run it manually with "sh /lib/partman/blahblah" it works
figured that out just after I commented. Fixed ISO is posted now http://steamcommunity.com/groups/steamuniverse/discussions/1/558751812811926489/