I had the same kind of trouble with the auto-installer. Here is how I solved it.

Go here: http://wiki.nitdroid.com/index.php?title=N900-install

Follow the section Step 1: Partitioning and do exactly what it says. If you have sshd running on your N900 and are able to use a computer to copy/paste the commands, it may be easier. You need to be especially careful in the "sfdisk" command to type it exactly as it is shown there. Beware, this will erase anything that's on your SD card.

When you get to "Step 2: Installation", forget about it, and use the auto-installer instead. Now hopefully it will work for you.

Once you have NITDroid installed and working, you can then use gparted to resize the partitions (without losing any of your data), and making room for additional partitions to use for whatever you want.

In my case I used gparted inside of Easy Debian on my N900. The UI is not optimal, and it took quite a long time to move 2GB of data on the Class 2 SD card, but it worked flawlessly.

I'm not sure but it could be that you don't have bzip2 installed?

Did you do this before starting the installer?

apt-get install bzip2 wget
apt-get install multiboot multiboot-kernel-maemo

If yes i'm not sure why it's bailing?

You could turn to this forum for help wich is the official site for NITdroid, most problems has been asked and solved

www.forum.nitdroid.com

So I made sure I had everything I needed to install NitDroid first and xtarm told me I already had bzip2 and wget.

Next I tried partitioning the card exactly as described by the wiki using the recommended 14100 setting leaving me with only 1 gb of space for nitdroid.

after both events I am still getting tuck on the "Extracting NitDroid-0.0.8-Popov.tar.bz2"

Guess I'll check out the nitdroid forums for further info.

Thanks a bunch guys.

So it turns out 16 gig sandisk cards just dont seem to want to deal with nitdroid.

Installed just fine on an 8 gig sandisk.

Rest of the story can be followed over at teh nitdroid forums: http://forum.nitdroid.com/index.php?topic=431.0

going to order a kingston 16 gig and see how that goes as my next option.

Ended up getting my 16 gb kingston flash card. Made 3 partitions on it from all I have learned by messing around and from Maemo and Nitdroid forums.

Install went smoothly! Altho It seems I can only use Wifi to get to the net in Nitdroid, but i think thats just how it is for now.

Now I need ot figure out how to get Meego on here

Just thought I would share.

I would like to state a scenario that I am trying to create on my N900. I have an 8GB Memory Card and I would really like to have it partitioned such that one partition runs NITDroid, and one other partition will be used by Maemo to store some data. is this possible? If yes, what should I do? I am a bit hazy with the entire partitioning stuff.... well totally hazy to be precise.