Did you remember to start whatever you are starting from custom init script in background, e.g.:

/drive0/mybin/myprog &
exec /sbin/init.empeg

The first line starts your program without waiting for it to return (it should not use stdin, stdout nor stderr). Second one starts stock init, but instead starting it 'on top' of shell (by fork() - exec()) it overwrites shell process, as we won't need it any more. I chose a location within music partition for example program since it doesn't get overwritten during updrade. I don't remember, but it might be necessary to mount it first.

Search a bit around, there are numerous examples on the board.

Hey, it chomped (actually, failed to wrap) most of my message. I will try removing pre tags... Yes, better! Another bug in the board SW....