Bug#787794: lifimage fails to successfully boot on hppa
the message 'seekread() returned 2048 expected 8192' on gzipped kernel.
That seekread-message is not critical. I think I fixed it in a newer palo version.
You attached the dmesg from latest debian kernel (4.0.0) - so it's booting fine with latest kernels.
But could you try to boot (and attach the dmesg of it of) the kernel from the lifimage as well, e.g. by using this debian package:
I quite don't understand yet, why it fails to start the installer on your machine.
It might be the "old" kernel, or some stuff in the initrd which allocates too much memory.