Don't follow the instructions in the readme too rigidly.
I booted the install image from a Kingston 512MB USB stick with boot hd0:0 morphos-2.0-efikainstall.img but it was too damn slow so I got a network timeout.
Still, I had plenty of Linux partitions so the install image can be booted from one of those and you can keep the ISO itself on the USB stick (or download it as you install).

MorphOS 2.0 is running nicely