I am having the same problem. I downloaded Fedora-11-i386-DVD.iso and extracted the contents of the isolinux directory to my USB stick. I renamed isolinux.cfg to syslinux.cfg, and added a new section as the default:
menu label ^Install from kickstart
append ks=hd:sdb1/ks.cfg initrd=initrd.img
I then create a ks.cfg file, and then use the syslinux utility to make the USB stick bootable.
When I boot from this USB stick I get a blank gray screen. When I click any key I get a "Password Required" prompt. What am I doing wrong???
This problem happens on multiple PCs. And, if the same exact process is done with the Fedora 10 files, it works just fine.