isolinux.cfg
serial 0 9600
default install
prompt 0
timeout 100
label install
kernel install.amd/vmlinuz
append console=ttyS0,9600n8 initrd=/install.amd/initrd.gz --quiet
So I gave this up quite easy, and I took another approach.
What I did next I followed the flexible way, as described in the debian documentation, but with some changes:
1/ I set up 2 partitions on the USB disk (/dev/sda in this example), both FAT16 (e code in fdisk), both 500MB and set the bootable flag on /dev/sda1
2/ pretty much followed the documentation and setup fat16 on /dev/sda1 and /dev/sda2:
mkdosfs /dev/sda1
mkdosfs /dev/sda2
3/ I installed the MBR on /dev/sda
install-mbr /dev/sda
4/ Installed the syslinux bootloader on /dev/sda1
syslinux /dev/sda1
5/ Copy the kernel and the initial ram image on /dev/sda1. This is done by mounting /dev/sda1 on let's say /mnt and the copying from the netinst cd vmlinuz and initrd.gz from the folder install.amd/ to /mnt (where I have /dev/sda1 mounted). Then I have created the syslinux.cfg file on /mnt according to the documentation and added the entries: