CentOS - Apr 2013 - Merging os and updates

I've been able to successfully kickstart CentOS 3.9 from the base
repo, but no such luck after merging os and updates. I think I did
everything right - updated base/comps.xml and regenerated
hdlist/hdlist2. Updated  the yum repo as well although I'm pretty sure
it's not used by anaconda.

This is difficult to debug. The setup is running under kvm on a CentOS
6.4 host, and for some reason, a completely headless install fails
(--graphics none; virt-viewer complains loudly and dies). A graphical
install with vnc looks quite different from newer OSes' ks installs,
there is no VC showing package install progress or an interactive
shell. I.e. I cannot tell what exactly fails.

Yes, there is a specific legacy reason for using 3.9 here.

Some updates.

Rebooting after kickstart, the vnc screen shows

Booting from Hard Disk...
GRUB

It's hung there. This makes me think that grub wasn't installed
correctly. But this looks normal:

# file -s /dev/dm-6
/dev/dm-6: x86 boot sector; GRand Unified Bootloader, stage1 version
0x3, boot drive 0x80, 1st sector stage2 0x882ee7, GRUB version n.m;
partition 1: ID=0x83, active, starthead 1, startsector 63, 20964762
sectors, code offset 0x48
#

Next, with some kpartx magic, I'm able to mount the single partition
on the lv that provides the vm's disk device and find that /boot is
all kernel pieces. Modules are missing, too, so the kernel didn't get
installed. Manually extracting the kernel rpm and putting the pieces
into place does not help, even if I build an initrd.