It's running kernel 4.4.0-36-generic.
Looking at the console I see this
Multiple /scripts/local-block ... done lines. The USB keyboard I have attached did not work, so I rebooted and at the grub boot menu I choose another kernel:
4.4.0-34-generic instead of the default 4.4.0-36-generic which fails to boot.
Kernel 4.4.0-34-generic boots ok.
I tried to re-install the packages for the kernel, but still got the same failure.
So, I compared the files kernel files with another identical homelab server (ts02).
This server works:
root@ts02:/boot/grub# ls -l /boot/
total 87640
-rw-r--r-- 1 root root 32061904 Aug 29 21:55 initrd.img-4.4.0-36-generic
This server fails during boot.
root@ts01:/boot/grub# ls -l /boot/
total 87555
-rw-r--r-- 1 root root 31977897 Sep 4 20:42 initrd.img-4.4.0-36-generic
So I copied the initrd.img-4.4.0-36-generic from ts02 to ts01. This fixed the problem and ts01 booted OK.
