[CentOS] local repositories

I need a clarification to the documentation.

My manager added a 6.2 repo; however, when I try doing pxeboot installs,
it fails, asserting that it can't find the group info. Another admin I
work with thinks it's not really what it's failing in, and notes that it
404's on images/updates.img and images/product.img. We *think* that's
irrelevant and ok. What is not clear to me is when we run createrepo, what
directory you need to be in at the time you execute it.

        mark