I use an XP500. I had a problem with booting up once. I also have VXL30/32 board installed, and was using a single power supply, that is the XP500 drawing power from the A500's original PSU, via the side expansion bus.
I also have an A590 drive, and so I plugged the PSU from that into the XP500 directly (in the back), and the problems went away. The power jacks are the same for both A590's and XP500's, (and for GVP A530's as well). A normal A500 PSU will not fit.
Does the A500 boot without the SupraDrive attached? This may confirm the status of your PSU. It may also confirm if your WB disk is still good.
I sometimes lost my A590 due to a not fully seated connection between the A500 and the A590 through the expansion bus. A good shove solved that one.
You mentioned something about the drive light staying for 10 mins, while the system appearing to do nothing. This may indicate a problem with the hard drive itself. It may be toast. It may also be simply validating the disk, which may take as long as 20 mins depending on the size of the disk, after which your system may boot up again.
About the Kickstart versions. The A500 does not require the KS disk, as it has ROM 1.2+ chip installed. What is requires is a Workbench Disk, as opposed to most A1000's which required both disks.
If your A500 ROM is KS version 1.2, then you must boot from floppy. If this is the case then you must disable Autobooting on your XP500. The way to tell is to boot your A500 without a floppy and without the Supradrive attached and read the prompt that asks for Workbench (with the picture of the disk). It states the version (1.2 or 1.3).
If you are running KS version 1.3 or higher then you can enable auto-booting, that is boot directly from the Hard Disk without inserting a floppy.
To turn ON autobooting on a XP500, you need to move Dip Switch #4 (on the side of the XP500 case), to the 'DOWN'position. To turn it OFF the same switch must be moved to the 'UP' position.
Hope this helps!