Games play just fine from disk but no matter what I do WHDLoad crashes. I run Memtest in workbench and it spits out error after error so there must be something up with the 040 board.
Hi, I can speak for BetterWB itself only:

There is no impediment whatsoever to install and use WHDLoad with it. Many people have reported it working without issues. If you are sure you didnt corrupt your installation, it is surely a hardware issue.
I used to have a Falcon 1240 some years ago. I remember I used falconpatch (Aminet) to fix some problems it had. I also remember falconpatch was kickstart dependant. Maybe it helps...