did you try to disable the primary IDE device and enable the secondary IDE device? In that case, what happens if you boot your device? I tried different boot order settings in the empty lines, and it looks like nothing changes at all with those settings. As I already mentionned in another threat, some bios settings boot from a normal dos (win98) setup on a CF card and some boot from a CF card wich is made bootable with the HP boot utility and a USB -> CF card. Some people also mention that the CF card should be no bigger than 1 GB, however others connect a microdrive of 4GB..? It does seem that a microdrive only works reliable if the CF slot supply of the IA-1 is changed from 3.3 to 5V. If you can't find the HP boot utility on the web, just give a yell on this BBS.
I guess that a full featered desktop linux wan't run very nicely on a 266Mhz CPU with only 32MB ram. You can upgrade the CPU, but than you run into Heat dissipation problems (the passive cooling block on the CPU doesn't cool enough)and power supply problems (The supply of the IA-1 doesn't has much power reserve).