I have to agree with the "defective bit" theory...
Remember that a disk drive isn't just magically filled with data only, the FAT contains a huge number of pointers to where that data is stored, also the clusters are chained together as linked lists etc etc.
You only need one of these pointer values to be screwed up and "the whole house comes a tumblin' down".
Sounds like a bad cable, or a bad circuit trace.
Also remember these units weren't shipped with Disk Drives installed, so there's no guarantee that the IDE interface was ever actually electrically tested! ( a common save-a-few-cents move for mass manufacture)
Did you try another cable? (it's not mentioned in the first post)