I've never been good with bug reporting tools so do with this as you like...
You're install over network option is for shit. Spent hours and hours on this to the point of setting up my own mirror. With the FTP method it sends the server a http RETR command when it gets to Packages.gz. With the HTTP method it requests Release just fine (same as with FTP (notice a pattern?)) and just stops there, no request for Packages.gz at all. This is using the main setup floppies (not a 'flavor'ed version).