Hi, there are AFAIK some problems with the new Debian installer, especially on older PPC-Hardware, such as PReP-Machines. I remember that I had an issue with the Boot partition, too. If you have a tftpd-Server set up, you can boot your kernel via network. If you don't want to do a network boot all the time, I would recommend to do so at least, once - because setting up a PReP boot partition while the system is running (e.g. you can use fdisk) is possible.
And you're right about the bootloader: The kernel is loaded from the boot partition. HTH, Christian