I had a similar problem on an EBX board a a few weeks ago. The solution was to put in a long time delay in the initrd startup script before it attempts to access the root file system. 12 second delay was 100% solid, 7 seconds was a little shakey. It's not at all clear that this is your problem.
Thanks for the help. Sorry for not replying faster, but I've been sidetracked.
OK, here's what happened:
1. After more reading, I found an article that explained that dd should only be done on an unmounted drive, and to pay attention to /sda1 and /sda: I think the problem I had was that the USB key was still mounted, and I mixed those two, ie. used "dd if=diskboot.img of=/dev/sda1" instead of "/dev/sda"
2. After using dd correctly, I got the mini-ITX to boot all the way to when I'm asked about the address of the FTP/HTTP server from which to fetch the install files. Unfortunately, that's when I was sidetracked, so had to turn the computer off and take care of business.
3. When I resumed the install, I could no longer boot, with the error message (from memory) : "DISK BOOT ERROR"
4. I let a couple of days go by, reading a bit about the issue on the Net, and finally got it to boot, but this time, it fails when I use USB-HDD or USB-FDD (although it worked above), but works if I choose USB-ZIP.
I have no rational explanation as to why it failed resuming in step 3, but I suspect the cause for step 4 is that a USB key needs more than just a diskboot.img if it needs to boot as HDD or FDD. Shouldn't a USB key need an MBR?