If the expansion card works in another Mac and the 540c works without the RAM card, you have to suspect the female connector on the CPU daughtercard into which the RAM card plugs.
I've seen it. A 603e/117MHz card that I bought had the end contacts damaged, either by or before a kludged attempt to fix the contacts in the socket. The system could (erratically) 'see' only 4MB of the 32MB on the card. Getting and installing a new socket will be a challenge. If this kind of damage is the cause, a new daughtercard may be necessary. 33MHz cards are getting scarcer, but still about.
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I've seen it. A 603e/117MHz card that I bought had the end contacts damaged, either by or before a kludged attempt to fix the contacts in the socket. The system could (erratically) 'see' only 4MB of the 32MB on the card. Getting and installing a new socket will be a challenge. If this kind of damage is the cause, a new daughtercard may be necessary. 33MHz cards are getting scarcer, but still about.
de