Let's see. In no particular order...
Reset vectors are something to do with reset-resident stuff. So if you've changed the contents of the Flash, clearing the reset vectors will make sure that the Flash is re-read when you reboot. It also clears out stuff like BlizKick, IDEFix (if it's been made resident), maybe even the 3.9 modules (don't remember). I've had mixed results clearing Poseidon stuff. A push from
this tool sometime helps. A cold reboot usually works better.
Green flashes are normal. That's a good sign.
PsdRomTag makes your current configuration reset resident. Useful if you don't have a Flash ROM and you don't want to reload from disk at every boot. Also means that you can boot from a USB stick once the modules are loaded in. Makes more sense with a Highway or Subway card.
It sounds like you're almost there. I've got a few more ideas you might try. First, unset the Zorro II jumper. Comment out PsdStackLoader and (cold) boot with the Flash disabled (LMB by default). Pop into Trident and make sure the only hardware controller is denebpio.device. Go into the Configuration panel and delete everything there (except the core, which you can't delete). Go to Classes, massstorage.class. Set the Startup delay to 1000ms. Hit Save Defaults. Hit Save in Trident itself.
Now go into Luciferin. Clear out the list of modules on the Local tab. Now select Poseidon USB from the Quick Setup menu (should work out to be about 1300 blocks). Upload that to the Flash. Loading in the device alone isn't enough, because the rest of the stack needs to be there to know what to do with it

Make sure PsdStackLoader is still commented out from user-startup, and cold boot. Any luck?
The startup delay under massstorage.class is something that I only figured out last weekend. Whenever I tried to boot with a Flash drive attached, it wouldn't be detected and opening Trident would hang the machine. Maybe the same mechanism is behind your problems.
If this all works, you can probably swap in denebdma.device, save, and re-Flash to get going at full speed.