Well seeing AfAOS for some months I must say it's really cool but it's not so fast comparing to normal windows even in 060.
Especially if you put Antialiased fonts and full PNG icons in every icon!
I don't think that 040 is such a power monsta for AfAOS. Not that is not running though. Dunno if it's because of 040, the 32MB of RAM or maybe a not enough PSU (the thing with the drive clicking and mouse freezing on the click shows that maybe something wrong with the power supply).
Other reason could be the not efficient cooling. Voodoo3 for example gets hot as hell even with the default heatsink. Checking whether your system has enough power supply (especially the 5V voltage) and if the cooling of hot surfaces get efficiently controlled is a nice start.
Have you also tried an AntiClick program for the floppy to check whether it freezes the mouse without the Click performing?
I'm not an hardware expert so my ideas could be silly, but people with more experience in hardware troubleshooting may help ya out.
I haven't ever used Birdie+Visual prefs. I was either plain WB or AfAOS
