I am having the same issues. I can install the 2.6 image fine, but after i run
sudo apt-get update && sudo apt-get upgrade -y
or update the binaries from the retropie_setup script, the system becomes unusable. I have re-installed the image several times over the last couple of days and it works fine right up until i run either of the updates.
Directly after the update i am unable to shut the pi down as when i issue the reboot or shutdown commands i get an error that indicates the binaries are no compatible with the system. Its like the update overwrote my system with binaries from a completely different architecture.
I have a RPI2 and live in Australia (could be a corrupt local mirror?).