It will use http. Is the datastore instance configured properly in the property dictionary? (if it's writing the kickstart file, it should be). is something wrong w/ the kickstart file itself? eg, can you use that kickstart file to build a box manually. boot off the esx cd and at the boot prompt i think you say:
"linux ks=http://<ip>/pxestore/<ks file>"
that may mean your system package is messed up.
post the kickstart file if you want...
Try out the option Alt+F1/F2/F3( I don't remember the exact one ) to see what it is doing in background.
Or otherwise complete the installation by manually entering values and then check /root/provscript file to see details of installation.