system 8.5

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MacOS 8.6 is a free upgrade & bugfix for 8.5: it is highly recommended over 8.5, which tended to be a little unstable. 8.6 is also a trifle less RAM hungry than 9.x

do you reckon the 4Gig card itself is borked

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That would be my guess. Have you tried running any low-level diagnostics on the card? Checked/verified/repaired in Disk Utility, or some flash-specific diagnostics?

any standard PCMCIA->Ethernet adapter

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You definitely need one with available Mac drivers compatible with your OS release. System 7 Today may have a list someplace.

(Incidentally, have you considered 7.6.1, or 8.1 for this machine?)

do I need to steer clear of cardbus cards?

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Yes. This is not a CardBus slot. 16 bit PC Card/PCMCIA only.

With OS 7.6 installed, I get "bus error" on boot.

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That's odd. Straight 7.6, or 7.6.1? (IIRC, the .1 release fixed a few minor bugs)