Hi,
This is just a guess,but check the HP drive for a termpwr(termination power) jumper,not to be confused with the termination jumper,set it if it has one. it sounds a bit like the atlas was supplying this termination power to the buss,and when you removed it,its not got power to activate the terminator. its not uncommon on 68pin drives for this to be a problem. if this doesnt work,try using a active terminator on the end of the chain(with the HP drive unterminated),it may fix the problem.
As far as using the hcII+8 in a 4000,its a very slow,old card.with a fast modern (read 5400 or 7200rpm)ide drive,the onboard ide would match the speed or do slightly better.the zorro2 vs ide load wont bet much different.If you want fast scsi,your best bet is a warpengine,cyberstorm MK2,3 or Cyberstorm PPC with fast 68pin UWscsi.If thats out of the question,go for a FastlaneZ3 its at least z3 dma and can attain around 9M/s i think,and you can add slow fast ram too!.
mike!