I've created a custom CD with a limited set of RPMs based on FC4. I
use a kickstart file to indicate which RPMs should be installed and
that works, except...

The PATH environment doesn't seem to be setup correctly. Some standard
RPMs (eg at, pam, sudo) don't install properly because it can't find
some basic commands like touch and chmod:
/var/tmp/rpm-tmp.60215: link 1: touch: command not found

What sets the PATH environment variable? Also, which image
(stage2.img?) is mounted at
the time the RPMs are installed?