Ok, first off - make sure you are really attempting to boot from the compact flash slot. The hackable BIOS' have three drives, A:, C:, and D:. A and C appear to be aliases for the same physical device. Perhaps this was done so the BIOS would have an easy fallback if the primary image was a dud. Whatever the case, setting A or C to "FIRST" will cause the system to boot from the onboard SanDisk. Setting D to FIRST will cause the system to boot from the compact flash device.
Second: the CF slot is attached to a second adapter. This is important for some operating systems, such as Linux and FreeBSD. The SanDisk is wired as the master drive on the first controller (ad0 for BSD). There is no slave device on the first controller unless you add the wiring harness (but your's sounds like a stock IA-1, so this doesn't apply). The CF device is wired to be the master device on the second controller (ad2 for BSD).
Unix/Linux device Physical Device BIOS Name
/dev/ad0 (hda) -> SanDisk -> A: or C:
/dev/ad1 (hdb) -> (not present)
/dev/ad2 (hdc) -> CF slot -> D:
/dev/ad3 (hdd) -> (not present)
BTW - by default, the second controller is disabled. You will need to reenable it, and if your CF device supports it, enable DMA. (Apparently the board supports ATA66) If you don't see a D: drive in the list of bootable devices, then you haven't performed this step (or you don't have anything in the slot)
As for booting an OS from the drive, this can either be easy or hard - depending on the interface you choose. A lot of people bought USB CF readers, because they are easy to find and are hot-swappable. I chose to have a custom dual-deck IDE-> CF adapter built by Mesa electronics. It cost me $50, but it supports to CF devices in master/slave mode. It made working with Linux and FreeBSD dead easy, as I could attach it to a normal PC and install via CD-ROM as usual.
The biggest thing to remember is that the startup pointers and partition map *MUST* be correct. I don't understand how any CF reader could screw this up if you are dd'ing a binary image, but apparently some do. Other threads cover suitable CF readers. After that, it's just a matter of figuring out what you want the little machine to do. I turned mine into dedicated X terminals running FreeBSD. I even managed to use the onboard flash for a basic, read-only /.
Third, (wow, this is getting long!) keep in mind that Midori is configured to be run *FROM THE SANDISK*. There are patches that will allow it to run from the CF slot, but a normal install of Midori (such as the wild_wes/midori_3 version) will choke because it wants to mount itself from /dev/hda not /dev/hdc. You will have to either find someone who has rebuilt it with the new fstab (which controls what partition is mounted where), or install Midori on the SanDisk.
Fourth, from the description of your problem, you haven't completely blown away the SanDisk (or changed the boot order). The midori images are EXACTLY the same size as the SanDisk. The correct way to install one of these images is to either boot DOS or Linux from a CF device and either 'dolly' or 'dd' the image over. (I use FreeBSD, so it's dd if=midori_3.img of=/dev/ad0)
That should clear up some of the issues. I didn't discuss installing a host OS to copy the image file from, but that's covered elsewhere. I would suggest DOS and 'dolly' if you are new to this, because Linux can be a tight squeeze on such small devices unless you know what you absolutely need and don't need.