Hi,
Perhaps the hanging problem is because some program in the startup-sequence is (for some reason) not working or starting properly? Or maybe a program in the WBStartup drawer?
The kick.175.20 file is Kickstart 2.04 (v37.175), but assembled to work at address $200000 (where your accelerator's fast RAM is), instead of $F80000. CBM distributed that type of file and the KickIt utility to registered developers. Similarly, ReKick and the special ReKick-type ROM files were used for testing 3.x Kickstart versions.
Anyway. First thing I recommend you do, is to make a complete image backup of the hard drive. That way you can always go back if you do something wrong, plus you can easily preserve all files on the HD (including any deleted-but-still-recoverable files). I can write a little on how to do that if you want.
As for diagnosing your problem, probably the best way, if you have a Workbench 2 floppy disk, is to boot the Amiga from its hard drive, choose Kickstart 2.0, then immediately insert the floppy disk. Then you can see what files are in the startup-sequence on the hard drive.
If you decide to upgrade to Kickstart 3.1, actually the best/fastest way to do that will be to use the ReKick program and a ReKick-type Kickstart 3.1 image. That way the Kickstart data will be in 32-bit fast RAM, without needing to use the MMU.