@zx6r6
How far do you get in the setup of the disk? ie. In HDToolbox, you Install, then Partition, then Save Changes? After the reboot what happens? Also, did you mean Workbench 2.1? (Or, are you using SKICK to load a new kickstart?
FWIW, I have a 37.300 with a 2GB HD (formerly 4GB) and never any problem. The GregDonner page is incorrect regarding the 40MB limit.