I only can guess, however
1. I think your problem is that / cannot be mounted, reason can be either controller, file system or whatever is not supported by kernel, (if supported by module, you need initrd)
2. With rescue disk, I think / is on CD, which is read only. So, wherever you think /etc is not wherever you want.
3. You need to know where your penguin lives. /dev/sda /dev/sdb.... This is where you picked through fdisk. This is not "try and error"
a. what file system and controller you have. and related kernel options
b. cfdisk output