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This bug is in the hard drive install procedure. For systems that are forced to install from a hard drive, i.e. Linux doesn't recognize the SCSI card, the install fails when the installer asks for the dos directory and path where the Redhat files were installed. Redhat reports that it can't find the files. Just a guess, but it could be because the installer is trying to mount the partition in vfat rather than msdos. Who knows? Workaround: Follow the instructions provided in the appendix of the install guide. Create the directories on a dos partition, copy the files from your CD in dos (or Windows). Then download the 5.1 installer (boot.img & supp.img) from the update directory. This works, but fails as it trys to read the packages from the 5.2 distribution. Once it tells you that it can't find the packages, select 'menu' and select the next step. I suppose this happens because the 5.1 installer can't read the 5.2 package table. You will have to select many more packages than normal as the pre-picked ones (i.e. the kernel) won't be selected. Finish the installation as normal. Have fun! (as they say over at S.u.S.E. :)
What utility did you use to copy the files from the CD to the dos drive? You will need to xcopy (or xcopy32 if you have it) the files from the CD or the install will indeed fail as you described.
This problem has been observed to be bug with the 5.2 installer. We have a new boot.img and supp.img for download to help alleviate the problem. The new images can be downloaded from ftp://updates.redhat.com/5.2/images/i386/boot.img ftp://updates.redhat.com/5.2/images/i386/supp.img