My interpretation is: there's nothing wrong with the HD or the cable - you can read and write to it when you booted from a CD. It's most likely that the System installed on the HD is simply not capable of booting a Wallstreet. Did you try starting it up with extensions off? (hold down shift while booting) If not, please do, and tell us what you find.

Next bet would be that you need a driver for the G4 upgrade. Download and install that and try again.

My second suggestion would be: Wallstreet is Old World ROM, and iBook is New World - it loads the ROM file from the HD into RAM on boot. Find the ROM file, and move it to the desktop (or anywhere else outside the System Folder), then try booting (with extensions off if it fails first go). It may be clashing with the motherboard ROM (I have no idea really, but worth a try).

If that fails, I suggest reinstalling OS 9 from CD to the HD while it is in the Wallstreet.