6. Attempted to upgrade to 3.1 using "Update Installation" option. Did not work. System was looking for USB drive from wher I first copied morphos/key from.
7. Several attempts failed.
8. Got advice to install from burnt CD with 3.1.
If you boot your MorphOS 3.0 CD and upgrade to MorphOS 3.0 you get MorphOS 3.0, not MorphOS 3.1. To upgrade MorphOS to a new version you must boot from the correct CD (in this case MorphOS 3.1) and
then choose Install and Upgrade.
That likely explains your issues at that stage.
The other issues sound more like hardware problems. I'm fairly confident in stating this since if such problems were common in 3.0/3.1 we'd get much more reports about them.