Try doing it manually: use Gparted to create & 'format' the swap partition (i use inverted commas because you don't use a swap file-system so don't really format it) and restart. Perhaps try running 'swapon /dev/hda3' or whatever in a terminal after booting.
Just to try and diagnose at which stage the process fails :)

I am struggling around with my geode servers (Fujitsu Futro A210 and Alix1c)

What I can say at the moment:

The A210 I can forget - because with only 128MB only loram works

On the Alix1c

The internal swap file is never recognized - only after I have created it with tazusb gen-swap

If I create a swap partition on the end of the stick with gparted, it is recognized during booting

If I boot from internal IDE CF-Card, both swap files on the USB-stick are not recognized, but I can swapon the swap partition with swapon /dev/sda2

But there is another problem - if I boot from the stick, I have no network and a gtk+ error - (strange desktop) - the funny thing is, that when I boot from the internal IDE - everything works. The funny thing is, that the same thing happens also on the Intel Essential Series D945GSEJT (Atom N270)

is this known? what can I do against this?

ok - the problem is solved

I just had to boot from the iso and replace the tux directory on the stick - there is somthing wrong with tazusb - I did not check which files was missing, but there was a difference .

It would be nice to mention this in the wiki, because it took me two days struggling around - those boards are not the quickest