I'm a fairly recent convert to Debian, having spent most of the last twelve years on .rpm based distros, so please take my advice with caution.
In reading your post, I note that synaptic is having trouble with the status list of available packages.
E: Encountered a section with no Package: header
E: Problem with MergeList /var/lib/dpkg/status
E: The package lists or status file could not be parsed or opened.
E: _cache->open() failed, please report.
So, a two-step solution may help, using dpkg (the low-level packagement application that Synaptic calls on to do it's magic).
First, rebuild the list of available packages. Open a terminal, and, as root,
dpkg --update-avail /var/lib/dpkg/available
Then repair the broken status file.
dpkg --merge-available /var/lib/dpkg/status
Note that the *available* and *status* files I've listed are from my Debian 6.0 installation. You should use the Ubuntu paths to those files.
I hope this works for you.