Thanks mooli.  Mooli's post on 04/28/2009 fixes this problem for me.  Just for 
clarity he wrote:
a)open console,
b)hold CTRL, ALT and push F1
c)login as root user
d)sudo su
e)add this line to my /etc/fstab file to resolve issue...

devpts /dev/pts devpts noexec,nosuid,gid=5,mode=620 0 0
f) type mount -a
g)hold CTRL, ALT and push F1 to get back into the console mode (or just type 
exit, then type exit again).
h)open terminal

NO REBOOT REQUIRED

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update manager "Error failed to fork pty"
https://bugs.launchpad.net/bugs/338071
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