"I have tried repairing the volume, by booting from CD, but this too did not solve the problem."
Did it actually give you the message that the drive appears to be o.k. when you were done or did you get a different message?
a Unix "pipe" is a connection between two processes where the output of one process is sent to the input of the other. I don't know how that works in relation to a .dmg but apparently something is not being able to be sent from one process to another which could be some sort of system corruption or maybe some sort of cache corruption.
Perhaps you should try all three steps as explained here:
http://www.thexlab.com/faqs/repairprocess.html