Your BIOS settings look correct (you did choose 3 1/2 floppy and not 5 1/4 right?)

It does sound like a cabling issue with the floppy, the behavior you noted is what floppy drives do when they're not wired up right. Make sure pin 1 on the mobo connector is wired up to pin 1 on the drive, make sure you're using the cable connector with the "flip" in the ribbon cabling, that's the bootable connector, typically on one of the ends if you have a 3 plug cable. Also in the "boot" menu in the BIOS make sure boot device #1 is the floppy.
You can "back up" your BIOS by downloading it from the ASUS web site, they keep all final BIOS revisions available. This may be a good idea anyway as the image files ae 512k each and 2 cannot fit onto a floppy along with the DOS boot files and AFLASH.EXE.
I'm not sure if you can flash from a CD-R using AFLASH.EXE, I believe it expects the path to/from the image files to be A:\. I may be wrong on that point.
Hope some of this helps, and if you get 1005 into the board I hope it gives you some more room

It sounds like you're starting to reach the ceiling from the voltage side of the equation though, you haven't mentioned any problems POSTing. My experience with 1002 and my previous 1.8A was that I couldn't reliably get POSTage at 130 MHz or higher FSB at any voltage, and the latest BIOS at that time (one of the 1004 betas) did correct this. Alas, that chip needed too much juice to do 2.4 GHz anyway.
If 1005 wasn't so important due to the 3:4 memory ratio issue we wouldn't be having this conversation, we'd be talking about your bandwidth scores

Good luck
