I had an install issue as well with a 1Gb SD. This solved it :
Create new partitions using fdisk, create at least two, set the type of the first one to fat (type 6), save the partition table, format the first partition using mkfs.msdos, copy the files to this partition and play.
The trouble with some preformatted and pre-partitioned SD's is that the installer/emergency system/nand-restore ... doesn't recognise the partitions, even though they are just fine for normal use. Repartitioning on a linux box or the zaurus usually solves the problem.
I've done this trick several times to restore nand, install uboot and I had to do it again to install titchy.
Second tip : wait long enough after copying the files to disk before unmounting the card. Even on a windows box. Have a break, drink some coffee (do not spill it on the Z), have dinner, play with your kids, tell you're wife/husband/girlfriend/boyfriend/dog/cat/... you love him/her, .... Just give it some time.
Chero.