I have tried to use the restore CD with my RaQ2r and 2 different 20GB disks.
The one conclusion is that 20 is bad number :D

I will try to find a smaller disk for testing.

The non working culprits are :

Western Digital 204BA and Seagate ST320011A, aka 'Cuda 4

Also, I would put a warning into the setup to avoid using this method
on a LAN that already has DHCP, BootP, etc ... can make a real mess.

Here is the output after install's reboot.

Nov 23 18:10:21 reboot: rebooted by root
syncing disks... done
rebooting...

ìCobalt Microserver Diagnostics - 'We serve it, you surf it'
Built Wed Mar  3 21:26:25 PST 1999

 1.LCD Test................................PASS
 2.Controller Test.........................PASS
 5.Bank 0:.................................16M
 6.Bank 1:.................................16M
 7.Bank 2:.................................16M
 8.Bank 3:.................................16M
 9.Serial Test.............................PASS
10.PCI Expansion Slot....................**EMPTY**
12.IDE Test................................PASS
13.Ethernet Test...........................PASS
16.RTC Test................................PASS
BOOTLOADER: trying to boot from partition /dev/hda1
Decompressing  done
Jump_to_Real_Kernel: disk error, trying BFD again
BOOTLOADER DEBUG: flashdelaying...
BOOTLOADER: trying to boot from partition /dev/hdc1
Decompressing  done
Jump_to_Real_Kernel: disk error, trying BFD again
BOOTLOADER DEBUG: flashdelaying...
get_root_dev: nr_boot_failures 0x00000002 exceeds maxtries 0x00000002 for boot_index 0x00000000


 *** halting ***