I kept fooling with the machine and even though I could format the drives and install the OS, I could never get it to boot from the sdcard. When I booted from the 3.1 install floppy and tried to run anything on the SDCard drive, the window that would open would freeze up. Mouse would still work and I could try to open another program but it would freeze up to.
I started from scratch again with different options in hdtoolbox and even using pfs3 but every time I would set up the partitions, and reboot to format, it would never finish the quick format. I tried several different sdcards and it was always the same thing. I had a very small compact flash card (16mb) that I tried and it formatted fine, and the os installed fine and it boots fine. Seems to run everything fine. I ordered a 16gb Sandisk like others have said they are using with no problems and am awaiting it. Going to try it and see what happens.
When I was using the sdcard, and it would format OK at the beginning, I did try booting without the startup sequence once and I did get a dos prompt. So something in the startup of 3.1.4 must have been causing it to never come up. Not sure why it quit formatting the sdcards? It would start and then never finish on all I tried. Once I would reboot, the machine would never come back up even with the boot floppy in, like it was trying to validate the hard drive or something. I could take the sdcard out and put in my pc and format it there fat32 and then i could boot again with the floppy and try to reinstall again but every time it would lock up doing the quick format. I hope the 16gb sandisk compact flash works and I will just use it.