I'm not certain this is a bug, but there's no in-depth information on customized installs or kickstart installs that I've been able to find. I need to use Kickstart to install a pre-compiled binary driver for Dell's PERC RAID devices (percraid.o). I have a driver disk, but don't want to require the installers to have to copy it onto the hard drive. What I've attempted to do is to extract the appropriate object drivers from the driver disk and add them to the modules.cgz in the install disk's initrd.img. This works to the point that the device is recognized (there's an "indication" of percraid found), but when it's insmod'ed later it fails with the (oxymoronic?) "Error -2 reading header: Success". Doing a manual install with the separate driver disk works flawlessly, and I'm certain I've included the correct 2.2.14-6.1.1BOOT drivers.
The install is failing to pull the driver out of the modules.cgz file. Try using that disc for a normal NFS install and when you get a shell on VC2 (after the NFS mount), use gunzip and cpio to try and manually extract that file to /tmp.