Well this is a puzzler. I can see nothing wrong with what you're doing, nor any reason why it shouldn't work.
All i can say is that before i installed my 40 GB Travelstar, i had 10.1 working on a 20 GB Travelstar. I upgraded drives when i moved to Jaguar, so i never actually had Jaguar running on the 20 GB drive. The reason i upgraded drives was twofold: When i ran the Jaguar installer on my old drive, it didn't like the 8 GB partition i had used for 10.1 and refused to install onto it. My guess is that a few bytes might have passed over the 8 GB limit (this wouldn't be a problem, actually, so long as no system files actually
cross the 8 GB line). So it appeared to me the Jaguar installer was strictly enforcing the 8 GB limit, whereas the 10.1 installer did not. As the drive was nearly full, it had become somewhat noisy, and the 40 GB drives with fluid bearings were so inexpensive, i decided the best thing to do was to upgrade. The 40 GB drive is quiet and has held up well the year and a half i've had it; well worth the investment. I bought an external firewire enclosure for the old 20 GB drive (and firewire cardbus card) to facilitate the transfer of files and, as an added benefit, now have 60 GB's available.
If i had it all to do over, i would make this change: I'd have about two 3 GB partitions (and probably a 2 GB partition) in the first 8 GB, and various other sized partitions. The reason for this is so i can have both Jaguar and Panther† boot partitions. When i installed Jaguar, i didn't understand very well how to take advantage of the
mount command. Since Jaguar supports the
/etc/fstab file (previous versions of MacOS X did not), it is so easy to keep one's home folder (and various other folders, for that matter) on different partitions from the boot partition. Only the
system files must be kept within the first 8 GB.
The only other thing i can think to suggest offhand is poking around the
xlr8yourmac site to see if you can get some help there. The link above is to a page for installing the Travelstar drive into a Wallstreet, which you've already accomplished, but the site has lots of info for Wallstreet owners.
______________________
† Because Panther is not officially supported by Apple on the Wallstreet, i'd want to keep a Jaguar partition around just in case i have problems with Panther. But those running Panther on a Wallstreet aren't reporting any problems with it, so i don't know this is really necessary. Still, such a partitioning scheme gives you more flexibility on a Wallstreet than a single 8 GB partition. Because of the way i chose to partition my HD, i'm now facing some major work just to install Panther.