I had this same problem. I was using the cheapest usb floppy CompUSA had. This causes a problem if you try to rebuild so use caution!! Well, let me restate that, If you need to load the raid driver it causes problems. When loading windows you need to press f6 to load 3rd party raid drivers, it works up to that point, once it starts to actually copy files later in the install it looses the floppy and can't copy the files from it
I am assuming that some where between the loading of the raid driver and coping the files the setup loads the drivers for the floppy (or usb) that screws it up. On a good note... I borrowed an IBM floppy from a friend and had no problems (which let me reinstall). Now once I have rebuild it detects my floppy correctly
. I'm guessing that this will be addressed in a future driver or bios update. But if you have access to a different floppy you may give it a try.