I've had this issue for as long as I have been playing with SXCE (circa b70)
When installing using the CDs, if I simply select either Core or Reduced Networking, the installation program does NOT continue after rebooting from installing CD #1. Seeing a Java related error, I discovered that if I manually select JVM (and its dependencies) via the custom install menu, the installation program would successfully continue after the reboot. This seems like a bug... On a related note, I thought Reduced Networking was suppose to fit on CD #1 (no other CDs required) - is that not the case anymore? Thanks, Kent