What worked for me to get sysinst started with the distribution on another 
CF card is to 

1. go to the shell, 
2. create a new directory (i.e.: mkdir /my_mnt), 
3. mount the partition holding the distribution (mount /dev/wd0e /my_mnt 
[note, I may have wd0 and wd1 mixed up]), 
4. exit the shell, 
5. instruct sysinst to install from a previously mounted file system.

This got sysinst working for me - but it crashed at some point when un-
tarring/un-gzipping one of the tgz files.  My experience (well, my 
recollection thereof) was that if I did not create a new directory on 
which I'd mount the source partition that the installation would fail.  I 
believe sysinst mounts other filesystems/partitions using /mnt which led 
to undesired/unexpected results.

Good luck.

jurrie