At least I know I'm not going crazy.
I was trying to make a remaster a Red Hat Enterprise Linux install with a custom kickstart script and could not figure out what I was doing wrong.
Work around in the meantime (if you have access to a *nix box) is to use mkisofs command.
mkisofs -r -T -J -V "Volume title" -b isolinux/isolinux.bin -c isolinux/boot.cat -no-emul-boot -boot-load-size 4 -boot-info-table -o /path/to/output.iso /path/to/sourcefiles/
Thanks LUK for great software, been a long time user.