sorted the gid bit problem, doing a chown root:root does it. As for the error messages I get
VFS mounted root cramfs filesystem
Mounted devfs on /dev
Error -3 while decompressing
c07de94c(0890545092) -> dfc0000(4096)
VFS: cannot open root device "" or 03:03
Please append a correct "root=" boot option
Kernel panic: VFS unable to mount rootfs on 03:03
I did change the ramdisk to 24000 but I will try increasing it again
1) ramdisk_blocksize in the pxelinux.cfg/default file. Should be 4096.
2) do "which mkcramfs" and make sure you are running the one you downloaded.
Can't comment on other distributions; I run Mandrake 9.1 here.