| Guessing that you have added a PCI ATA drive adapter card also, as the 200 GB drive won't be fully utilized by the internal IDE bus. You have 2 booting volumes on one drive, and none on the other drive. The hang at the Option boot, may be due to a firmware problem on your drive adapter card. Panther changed the rules somewhat, for how volumes mount, and your drive card may need an update, if one exists.
On your connection problem, my preference has always been to connect first, then start the software (mail, browser, whatever). 'Dial when needed' should work, but in my experience times out too frequently. Connecting first - takes care of that.
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