When using the local hard-drive partition that is going to be mounted root as installation source, setup reports an error: "Failed to create symlink for package source." Console 3 shows: "* failed to create symlink /mnt//: File exists" Really annoying!
You cannot do this with the Red Hat installer. You must have the source files on a non-critical filesystem (that is not /, /usr, /var or any other place that the install needs to write files to). Closing report as it is not a bug, but rather a fundamental of the installer program.