I use a mechware reader, and a CF HDD. I use a 500mb part for the OS, then another 500mb part, and then a 1gb part on my 2gb CF drives. i also am using SFS, with no problems. I am using an A2091, though. I found a step by step tutorial on how to set up SFS on a CF drive, and it works perfectly. Could it be that you are forgetting some of the parameters you have to set for SFS? Here is a link, just go here and click on the link to the pdf file and download.
http://eab.abime.net/showthread.php?t=61048I set mine up in Winuae. I hope this helps, it really helped me.