You don't need to start again. Just switch the Amiga off, wait some seconds and switch it on again. Then hold down both mouse buttons to enter the early-startup-menu. There choose "boot without startup-sequence".
Now enter the following commands:
cd devs:
rename "amigaos rom update" "AmigaOS ROM Update.disabled"
Wait until everything is saved to disk and reboot. It should now boot normally and you can continue with the 3.5 main installation.
If OS 3.5 works ok, you can try to rename the rom update back to its original name so that the updater finds it and install Boingbag 1 and 2. Perhaps the updated rom update works better with your CF card. If not, just disable the rom update again.
The Boingbags are available here:
http://os.amigaworld.de/index.php?lang=en&page=18Note that after each change to the rom update file you have to switch the Amiga off so that resident modules are removed from memory and the new update file is loaded on the next boot.
Bye,
Thomas