i have thes same problem traying to install knoppix 3.2 on my HDD.

the knx-hddinstall works great but when it copies files from cd to hdd it says that cp cannot copy a series of hard-links (see the german version for a complete listing that somebody else has reported [thanks]).
after that the installation goes on without other problems but when i reboot and try my hdd installation the kernel gets into panic.
It says "Trying to stop inetd".
Checksum is ok.
Boot-floppy does not circumvent the problem.
Knoppix 3.1 worked perfectly with ext3 on same PC and Hd-installed without problems.
memory is ok (much memtest) so is CD-rom (checked).

Any suggestion ?

Thanks in advance.