Hi, congratulations for your Picasso II card!
Fblit is known to cause problems under RTG. There are many system hacks which will probably fail in an RTG enviroment such as yours, so I recommend you take a look at what patches you are using.
BTW, there is a simple guide for creating P96 screenmodes which is both simple and good:
http://www.amigakit.co.uk/support/picasso96mode.php
