Farallon slapped the PhoneNet label on some products that aren't PhoneNet, before realising tha this confused buyers. Cards of this generation may not be able to autosense which ethernet port is active. It is possible that the jumper sets the port to RJ45 or AUI. Alternatively, the jumper may be required to configure 10-BaseT to work with some old ethernet hubs. I'd leave it alone for now.

Download the System 7.5 Network Access Disk (a single floppy image) which works with many third party ethernet cards as well as Apple's. Alternatively, try using System 7.5.x.