I had the same issue the other day when trying to do a network installation of ESX 3.5. I was able to solve the problem by editing the ks.cfg file by changing "http" in the path to "ftp" and then I no longer received the error. However, I was then presented with an error about invalid licensing information in the ks.cfg file.
When using the scripted installation utility to build the ks.cfg file if you select either Network or NFS installation, many of the other fields, including the license parameters, are greyed out. Adding the correct licensing information for your environment will allow the network installation to continue.