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The manual doesnt quite describe how to write a disklabel to a new drive. Here is how to do it on an SGI Indy. For other systems, see http://software.majix.org/irix/install-bootcd.shtml.
First, get to the boot console. From there, execute the following commands where X is the controller number and Y is the drive number:
boot -f dksc(X,Y,8)sash64 boot -f dksc(X,Y,7)stand/fx.64 --x
From here you can write a new disklabel. Once this is done the installer should be able to start off the CD in the normal way.