Well, even if it's installing to SD it tries to download the file to /home/tmp/ipkg/inst, so I had to move /home to my SD card and make a symlink to it. I would have just changed the tempinst destination in ipkg.conf, but when I tried that it had no effect (I don't know why).
I did finally get installing packages to work since it's doing everything on the SD card, but I'm still concerned. With only about 1MB, just package lists and the like may fill it up after a while.
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Well, I'm glad to hear you are making progress, I saw your other post!
Yeh, I remember trying many things also to free up space, and I think I
was able to free up about 5 MB, by moving parts or all of the X11 stuff
to SD. I hope some other folks with more pdaXrom internals knowledge
add some info to this thread over time. For instance I'm a little concerned
with moving /home to SD as a symlink, in case there are any SD issues, like
an accidental physical eject. I'm not sure any new processes could be started,
since the initial working directory would not exist, etc.. Maybe there are
safeguards in place, but it came to mind, and I figured I'd mention it.