Some hard drives had "limit capacity" jumpers (or firmware cap limits) to limit them to 1024cyl for older PCs. But that wouldn't explain the CF card, but I have seen quite a few CF cards that don't play well in "IDE mode", might have two problems here, that just have similar symptoms.
Has this drive and CF card been tested in another system? How do they act in a "modern" PC? Arrow_runner may be on to something too I have seen FAT tables so hosed that no DOS utilities could manipulate them or make them right.
What is the make/model of CF card, I have run into LOTS of generic cards that don't do IDE mode well, but even some name brand ones, like Toshiba don't do it well. Best to drop the money on a Sandisk in my opinion, they have never let me down in IDE mode ;-)