If you remember how to change the boot settings... Is it hold down the mouse buttons on startup?
Boot from the Workbench 3.1 disk. If the hard drive has come up:
Open Amigashell. CD into dh0:
ed startup-sequence
edit the startup-sequence so it is the same as the one on you workbench 3.1 disk. (you can back it up first)
it will probably be a command like cpu fastrom which is causing it to hang. for the 020 you can do CPU instcache only.
Also check that the addbuffers command isn't too high.
