RAMBOUILLET, France (AP) - The American mediator at the Kosovo peace talks pointed to progress yesterday despite a deadlock over distracting demands from rival Serbs and ethnic Albanian.

Each side, fearing it will come up a loser, is trying to jump ahead to more difficult issues before some of the basics are settled.

''This is not easy, and frankly it's not a lot of fun ... but we are making progress,'' said Christopher Hill, who heads the team of three mediators shuttling between Serb and ethnic Albanian delegations.

The talks aim to reach a three-year interim settlement for Serbia's southern province of Kosovo, where more than 2,000 people have died and about 300,000 have been driven from their homes in a year of fighting between Yugoslav forces and ethnic Albanians who want independence.

The warring parties were pushed to the table by the threat of NATO attacks on Serbia, which makes up Yugoslavia along with the smaller Montenegro.

Foreign ministers Hubert Vedrine of France and Robin Cook of Britain, co-hosts of the conference at the magnificent 14th century Chateau de Rambouillet, returned here yesterday just three days after the opening of the talks, in an apparent effort to move them along.

They met with mediators Hill, Wolfgang Petritsch of Austria and Boris Mayorsky of Russia.

''You should not think it is always a crisis when we come here,'' Cook told reporters. ''Sometimes we are here to make sure there is progress.''

But the Albanians and Serb delegations remained deadlocked on the third full day of talks over a Serb demand to keep Yugoslavia's borders intact and Albanian demands for a referendum on independence, a formal cease-fire and NATO guarantees for the eventual interim settlement.

Representatives of the Kosovo Liberation Army, the rebel group battling for independence, have said they would accept only independence.

Serbia has rejected freedom for Kosovo, where 90 percent of its 2 million people are ethnic Albanian.

Mediators want the Albanians to give up their demand for independence - at least during a three-year interim period.

Hill said keeping the delegations on track was difficult.

The six-nation Contact Group - the United States, Russia, France, Britain, Germany and Italy - drafted the interim settlement. Topics not broached here yet include how such a settlement will be implemented or the eventual deployment of NATO troops into Kosovo.

NATO generals are working on plans to dispatch 25,000-30,000 troops to Kosovo, including up to 4,000 Americans, to enforce the peace agreement.

Russia strongly opposes the NATO threat of force. A Western military source, speaking on condition of anonymity, said yesterday discussion of a NATO deployment is being put off until the end of the talks to avoid a diplomatic dispute with the Russians.

Yugoslav Foreign Minister Zivadin Jovanovic said in Belgrade autonomy for Kosovo would be no problem, but when asked whether his government would allow foreign peacekeeping troops to be stationed in Kosovo, he said, ''Under no condition.''

In Washington, the Clinton administration said Serbia would be making a ''big, big mistake'' if it rejects a NATO peacekeeping force in Kosovo.

If the ethnic Albanians agree to a settlement, and the Serbs refuse, ''the Serbs will be subject to airstrikes,'' State Department spokesman James P. Rubin said.