I had the same issue on an upgrade from 13.10 to 14.04.

When I did an 'sudo update-grub' I got the following message:

Warning: Setting GRUB_TIMEOUT to a non-zero value when
GRUB_HIDDEN_TIMEOUT is set is no longer supported.

So, in my /etc/default/grub I commented out the line:

GRUB_HIDDEN_TIMEOUT=0

and did another 'sudo update-grub'. The error message was gone and the
bug disappeared after a reboot.

So I think these "malformed file" messages are related to an error in
/etc/default/grub.

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https://bugs.launchpad.net/bugs/1311247

Title:
  error: malformed file, press any key to continue

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