Copy/Backup the RHEL5 DVD on the local hdd.

Mount DVD drive:
#mount /dev/cdrom /media

Now copy all the files from the DVD disk to the local Hard disk drive
#mkdir /var/ftp/pub/rhel5
#cp -avf /dev/media/* /var/ftp/pub/rhel5

To configure YUM server, following rpm's and services are required:

1.vsftpd->vsftpd-2.0.5.10.el5.i386.rpm
a). Run vsftpd rpm
#rpm -ivh vsftpd-*.rpm
b). iptables -I INPUT -p tcp --dport 20 -j ACCEPT
iptables -I INPUT -p tcp --dport 21 -j ACCEPT
iptables -I INPUT -p udp --dport 21 -j ACCEPT
iptables -I INPUT -p udp --dport 20 -j ACCEPT
c). For SELinux
setsebool allow_ftpd_full_access on
d). open the file :- vim
#vim /etc/sysconfig/iptables-config and modify below mention line
IPTABLES_MODULES="ip_conntrack_netbios_ns ip_conntrack_ftp"
Now your ftp server is ready to take the responsibilty of yum server.

2.createrepo -> createrepo-0.4.11-3.el5.noarch.rpm
#cd /var/ftp/pub/rhel5/Server
#rpm -ivh createrepo-0.4.11-3.el5.noarch.rpm
#cd..
#createrepo -vg /var/ftp/pub/rhel5/Server/repodata/comps-rhel5-server-core.xml Server

*****ON CLIENT MACHINE*****

#vim /etc/yum.repos.d/rhel-debuginfo.repo
[reposfile]
name= Updates
baseurl=ftp://ipaddress/pub
enabled=1
gpgcheck=0
gpgkey=file:///etc/pki/rpm-gpg/RPM-GPG-KEY

Eg: #vim /etc/yum.repos.d/client.repo
{*you can use the following lines if configuring on a local PC*}
[server]
name=YUM configuration for the client PC
baseurl=ftp://127.0.0.1/pub/rhel5/Server
gpgcheck=0
====>>>>press esc key and type ->:wq - to save the file and exit from vim