Munk I had the very same problem as yours.
That's what I did:

remove canola2 and everything related to it.
remove any app that uses python
remove python (dunno if it shows up in the App Manager, you can however remove it from command line:

as root:

dpkg --ignore-depends -r python2.5
)

- disable any extras repository.
- add ONLY the chinook extras repository and install Canola2 again.
- disable the chinook extras repository
- re-enable the diablo one (the default extras repo)
- enjoy, it should work.