I see a lot of posts about writing to the SD card, but I believe my problem is different. I am unable to create the SD card during the process of building an AVD.
I
I had a different problem using 32bit Ubuntu. When i tried to run mksdcard by hand, I was getting a file not found error.
The problem was open-jre/jdk. I installed oracle java and the problem was fixed. Unfortunately you can no longer install oracle java through apt/synaptic and have to jump through some extra hoops:
https://github.com/flexiondotorg/oab-java6