I 'debugged' code simply by following codeprogress file by file and part by part (echo is simplest debugger..) to pinpoint code in question and ended up commenting out:
@ob_end_flush();
in file admin/index.php on line 73
Reason is not clear, yet. Maybe someone already knows, php bug etc. Anyway when i have time i plan to look into it.
After commenting out lin in question installation finnished correctly and Moodle 1.5+ is up and running, not in production yet.
btw. Moodle version is 2005060201
mika