Make a backup of the Install3.1 disk, then replace the original 68040.library by the very small one which comes with the 060 libs. (In the original archive it is called 68040dummy.library and has to be renamed to 68040.library.)
Now boot from the Install3.1 disk. If the HDD is not yet installed, open the HDTools drawer and run HDToolbox to partition the drive. After the reboot format the new partitions.
Now open the Install drawer on the Install3.1 disk and double click the icon with your language. Follow the on-screen instructions. Do *not* choose "Novice" when asked for your skill !!!!!
After installation copy 68060.library to your HDD's libs directory.
Bye,
Thomas