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While logged in as root, cd to /usr/src/linux. Then type the command:
make menuconfig
Select Block Devices, scroll down to Loopback Device Support. In
the check box insert an 'M' to create as a loadable module.
Once selected, Exit and Save Changes. Once back to the command prompt,
type:
make dep
make modules
make modules_install
insmod loop
Attempt to generate your diskettes.
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