Comment # 6 on bug 1157366 from James Fehlig

Michael Chang provided the follow analysis in a private mail thread:

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Are you having gfxterm in grub.cfg ? It looks like the installer would
set it along with serial console, which could provide access via local
attached monitor at the same.

GRUB_TERMINAL="gfxterm serial"

While in my case I always modify it to

GRUB_TERMINAL="console serial"

The problem can only be reproduced if these three options enabled at the
same time.

1. nodefaults (seabios)
2. display none (seabios)
3. gfxterm (grub)

Likely that the initialize sequence of gfxterm tinkering with the
display device will break the system with display none + nodefaults,
which makes the vge device effectively seen but disabled. The failure in
linux command is a red herring, because the system is in broken state
that many grub commands are also not work (insmod, ls .. etc). In my
other tests were not even reach the boot menu (system looks to be
constant reset/reboot).

Please use GRUB_TERMINAL="console serial" or GRUB_TERMINAL="serial" for
the time being. Remeber to run "update-bootloader --refresh" to update
grub.cfg with the settings. I think in the future we should propose the
installer to set "console serial" because gfxterm has no input of its
own, hence will complete with serial for input and is never work as
expected. Besides now it looks worse as accessing display device might
have side effect when not available.
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Changing GRUB_TERMINAL from 'gfxterm serial' to 'console serial' indeed "fixes"
the problem. FTR, this can be done via autoyast with the follow <bootloader>
configuration

  <bootloader>
    <global>
      <terminal>console serial</terminal>
    </global>
  </bootloader>

Perhaps we should create a jira that proposes changing the installer to
s/gfxterm/console/ ? What would be the ramifications of that?