You have a system that, from your description, is *identical* to one I built as a crash-and-burn development unit. I never had problems with speed of booting, or errors, or any of the grief you mention. I think the secret may be in that one little line you wrote:
"but when booting from the HD I get some fatal error IO blah blah blah."
Makes me think there is something unwell in your hardware. Before I went any further with OS selection and installation, I'd download a test disk
http://www.ultimatebootcd.com/ and run some tests to eliminate the problem.
I've run Debian, Fedora, Knoppix and others on this level, indeed almost a carbon copy of this config with no probs at all
HTH
Jimbo