The setup script in /arch/setup tries to download kernel sources from ftp://ftp.kernel.org/pub/linux/kernels/v2.4, even if the user has chosen to build a 2.6 kernel from source.

I tested this with a 0.6-base iso grabbed from one of the sourceforge mirrors today.

A patch I made is available at the following url:
http://dely.conio.net/mirror/arch/setup.patch

As well as here:

--- setup.orig 2004-03-22 17:59:58.000000000 -0600
+++ setup 2004-03-22 18:09:10.000000000 -0600
@@ -742,6 +742,7 @@

local KERNTARG=
local SRCTARG=
+ local FTPTARG=
#if [ "$SRC_READY" = "1" ]; then
# umount /src >/dev/null 2>&1
#fi
@@ -769,7 +770,9 @@
if [ "$MODE" = "ftp" ]; then
if [ ! -f linux-$SRCTARG.tar.bz2 ]; then
dodialog infobox "Downloading linux source tarball from kernel.org"
- snarf ftp://ftp.kernel.org/pub/linux/kernel/v2.4/linux-$SRCTARG.tar.bz2 >$LOG 2>&1 || msg "Error downloading linux source" || return 1
+ [ $SRCTARG = $LINUX24_VER ] && FTPTARG=v2.4
+ [ $SRCTARG = $LINUX26_VER ] && FTPTARG=v2.6
+ snarf ftp://ftp.kernel.org/pub/linux/kernel/$FTPTARG/linux-$SRCTARG.tar.bz2 >$LOG 2>&1 || msg "Error downloading linux source" || return 1
fi
else
dodialog infobox "Copying /src/arch/linux-$SRCTARG.tar.bz2 to $DESTDIR/usr/src"