Red Hat Kickstart install stops to ask me to edit the repository when I'm using the DVD repo
I hope you're still working on this, because I ran into something similar when I was building my own iso. You need to set the baseurl to file://mnt/source to load from the repository on the DVD, e.g.
repo --name="Scientific Linux" --baseurl=file:///mnt/source --cost=100
When kickstart is able to find the repo, it will also resolve your install tree error. At least, it did for me.
Best of luck
The path was changed, consider trying the following:
repo --name="Scientific Linux" --baseurl=file:///mnt/install/source --cost=100