Tried to upgrade FC1 to latest release, but...
up2date says core is up to date but uname -r = 2.4.22-1.2115.nptl, which is old.
I am not completely sure about your particular problem.. However many problems with up2date can be solved by setting up to use a mirror that is up to the task of serving thousands..
http://www.redhat.com/archives/fedora-list/2004-January/msg01577.html
Alternatives to up2date exist, like yum and apt-get for rpm. See http://fedora.artoo.net for lots of good info.
Cheers, Michael