I had once tried booting everything onto the RAM and that did work...however, I couldn't use that as a solution as my file system on the cd is around 2.5 GB. So mounting everything onto the RAM and working out of it was not feasible. As for that I would always have to use a system that has around 3 GB RAM. So I tried mounting a small file system with a standalone busybox shell (initrd.img) and then trying to find my root file system.
My folly was that earlier I was trying to mount the cd-rom and chroot-ing directly into it, which was obviously not working as it was read only. So now what I did was, I found the hard drive, mounted it, formatted it...and then copied the contents of the cd-rom onto the hard drive. Then I chroot onto the hard drive partition. This works fine...however I understand that we can never get init/telinit working from a chroot environment. So as a workaround I have create a bash script that manually starts all the processes.
Thanks and Regards,