When the installer reaches the point where it inquires as to whether you want to create boot diskettes or not, it requires you to use formatted diskettes if you answer in the affirmative. If the user has unformatted diskettes, user must use another existing operating system to format the diskettes prior to allowing creation of boot diskettes. The installer should make no assumptions about the availability of another computer system in creating the boot diskette. Installer should format the diskette if it is unformatted prior to dumping boot system onto it.
I agree completely. This hat bitten my several times.
My guess that this is related to bug 18461.
Fixed.