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STOP!
The Amigakit HD is SFS formatted for the A1200, Are you using an A1200?
The HD is ready to go as is. It's like CWB. You boot from the HD then Install Workbench to it.
The reason the OS-Install disk is writing to itself is because there is already an OS-Install in the ADH0:c drawer.
The first partition is ADH0:
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