Do you have the Outbound Installer disk?
If I remember correctly, the proper sequence to install the OS was install the OS to the hard drive, while booted from the floppy drive. Then run the Outbound Installer utility from the floppy disk. This modifies the Mac OS, adds Outbound DAs or Extensions and fixes, checks the Outbound configuration (hard drive or floppy internal, and hard drive size) and writes the built-in EEPROMs with configuration data.
After that, the new OS install works properly.
Also, IIRC, the last supported OS was 7.0.1. They never finished a fix for 7.1.
If you can get a CF working with the thing that would be amazing. Also nice would just be hackery that would let other 2.5" hard drives work with it. As far as I know, it was limited to certain models of 20, 40, 60 and 80 MB hard drives, because their drive parameters are the only ones available in the configuration software which loads the EEPROM.
I think this one will work with it, but I am not certain. I'm pretty sure I've used the Conner CP2060 and CP2080, but I'm not so sure about the 2061, 2067, etc. variants.
http://www.ebay.com/itm/CONNER-CP2061-60MB-2-5in-IDE-Drive-Tested-Warranty-Ship-International-/310232161335?pt=US_Internal_Hard_Disk_Drives&hash=item483b471c37
If I remember correctly, the proper sequence to install the OS was install the OS to the hard drive, while booted from the floppy drive. Then run the Outbound Installer utility from the floppy disk. This modifies the Mac OS, adds Outbound DAs or Extensions and fixes, checks the Outbound configuration (hard drive or floppy internal, and hard drive size) and writes the built-in EEPROMs with configuration data.
After that, the new OS install works properly.
Also, IIRC, the last supported OS was 7.0.1. They never finished a fix for 7.1.
If you can get a CF working with the thing that would be amazing. Also nice would just be hackery that would let other 2.5" hard drives work with it. As far as I know, it was limited to certain models of 20, 40, 60 and 80 MB hard drives, because their drive parameters are the only ones available in the configuration software which loads the EEPROM.
I think this one will work with it, but I am not certain. I'm pretty sure I've used the Conner CP2060 and CP2080, but I'm not so sure about the 2061, 2067, etc. variants.
http://www.ebay.com/itm/CONNER-CP2061-60MB-2-5in-IDE-Drive-Tested-Warranty-Ship-International-/310232161335?pt=US_Internal_Hard_Disk_Drives&hash=item483b471c37