I have downloaded boot-RHEA-1999:044.img from updatse.redhat.com, along with the updates image. Then I booted with the new boot disk and my Red Hat Linux 6.1 CD in the CD-ROM drive, and I typed "text updates". The initrd image and kernel loaded, and then /sbin/loader ran. The loader read some from the CD-ROM drive, and then it just stopped. The only way to get around this bug was to boot without the CD in the drive and then insert the CD when I'm asked for it.
This is a known race condition that you are seeing. The current workaround is
to do just what you did . . . insert the cd into the drive only after being
prompted for it. We will be releasing a new set of updates which should have a
fix for this problem included in them here shortly.