You have the cables correct. The Amiga video to picasso cable goes in the lower (closest to the A4000 daughterboard) connection and you run a vga cable from the top connector out to your monitor.
If you are using the original harddrive and didn't reformat and reinstall 3.1 or 3.0, make sure there's no previous rtg software on the harddrive. Go into Devs:monitors/ and using the pulldown menu 'Show all' see if there are other monitor drivers from another rtg file system (like CybergraphX or EGS). Delete any that aren't p96 related or Amiga system related (i.e. don't delete PicassoII, NTSC, Productivity, DblNTSC, PAL, etc.) Next, go into Prefs: and again 'Show all' so you can see the Envarc: drawer. Open Envarc and see if there is a drawer named 'EGS', 'CGX', 'Cybergraphx', or 'Village'. The only rtg drawer that should be in there is 'P96'. Delete these foreign files and reboot. If you have just Picasso96 installed you should be all right, provided there's no other rtg system and nothing in s:startup-sequence or s:user-startup to screw things up. If you could show us what startup-sequence and user-startup look like it would help. For example, rtg software doesn't like programs like FBlit and BlazeWCP that mess with standard graphics routines.
