Copying large numbers of files over loopback from an ISO to the filesystem (in Nautilus) causes intermittent I/O errors. Clicking "retry" seems to let the copy continue, and the data seems to be okay. I've seen this outside Nautilus as well.
There is a bug reported on kernel traffic with loopback filesystems that causes hangs where you cannot shutdown or kill the process. It is reportedly fixed in 2.4.3, however I am seeing a problem in doing a cp of a large number of files (the whole install of 7.1 from non-raid to a raid disk) where it hangs after a while and I am unable to kill the process or shutdown. As this is the only similar bug listed here in the RH bugzilla I decided to add to this bug report rather than create a separate bug
This was fixed quite a while back (although I don't remember the exact details). I would be completely stunned if this is still present in Fedora Core or Red Hat Enterprise Linux (in fact I probably would have noticed by now if it was). This bug should be CLOSED/CURRENTRELEASE.
Thanks for the bug report. However, Red Hat no longer maintains this version of the product. Please upgrade to the latest version and open a new bug if the problem persists. The Fedora Legacy project (http://fedoralegacy.org/) maintains some older releases, and if you believe this bug is interesting to them, please report the problem in the bug tracker at: http://bugzilla.fedora.us/