I think I know what my problem is. I unplugged both of my SATA HD's and left just my SATA dvd drive in place. I then tried to use a usb drive. But the EXACT same problems occured. I.e waiting for root device etc. So it has to be a problem with my Plextor SATA drive.
Is there any workaround? Perhaps making the install run from another partition or drive? Can that be done?