Uh, that's a lot of questions ..
HDToolBox will actually add fastfilesystem to a new drive if the L: directory has it. No idea whether HDInstTools did this or not.
PFS3AIO is 1.3 compatible, you can use that.
In HDToolBox, always remember to press return every time after modifying any values in any text boxes. (this goes for many other Amiga string gadgets)
Forget the 1.2 ROM with a HD, you will not get autoboot with the majority of HD controllers. Just use 1.3 or newer.
The filesystem can be loaded from anywhere you like when you install it into the RDB, it doesn't have to be in L. Keep it in the root of our boot disk or whatever.
The instructions below tell you to click ok when you see the version + dostype. Don't just click ok. The default dostype is for FFS. Use 0x50465303 as the dostype instead when installing PFS3AIO. Don't forget to hit return.
After you have installed the new filesystem, you must also change each of your partitions to use it. Select the partition, click "Change..." (the button above add/update...) and then select the correct dostype in that new screen you get. If you had to type it in, you guessed it, hit return!
Always always format quick when formatting hard drives.