We were able to use the Installer successfully from a set of disks created
in the manner you describe. The steps we used to copy each disk are:
1) Copy the Installer disk to the server volume by dragging its icon to the
server volume's icon or window. Confirm the "The two disks are
different types..." dialog by clicking OK. A new folder is created on
the server volume with the Installer disk's name and files.
2) Open the newly created folder.
3) Insert a blank 800K disk and name it exactly the same as the original.
This should be the same name as the folder you opened in the previous step.
4) Copy all items from the opened folder (in step 2) to the new disk by
dragging them to the disk's icon or opened window. Do not copy the
entire folder--only the files and folders within it.
The Installer can become confused and not recognize a seemingly valid
Installer disk if you move files between folders or remove files or
folders. It is important to make nearly exact duplicates of the
Installer disks, with no changes in disk, folder, or filenames. As you
experienced, a disk-to-disk copy is a reliable way to make duplicates.