Just an update on this, I changed the serial cable wiring to use CTS and RTS. This is what I'm using now:

db-9 Male (Mac) => DB-9 Female (PC)

7 => 7 - CTS

6 => 8 - RTS

9 => 3 - TXD

1 => 5 - GND

5 => 2 - RXD

Speed is still not great, I'm getting around 630 bytes a second. But it's more than good enough and it's very reliable, transfers work great.

I've created an updated version of the 400k boot disk, including Packit, see details here:

http://tkc8800.com/page/File-transfer-from-pc-to-Macintosh-128k512k-via-serial-cable