I left a long reply with quite a few notes. but it looks like it’s gone.
Are you sure that the disc was recorded in HFS? I made no changes to the iso other than adding a new folder with the utilities you need.
Try this free Windows app, http://imgburn.com it was recommended on the Macintosh Garden website.
I also have the iso for the MAC OS 7.5 disc that is unaltered. You can try burning that as an HFS volume to see if there is any difference.
Have you tried holding C continuously when starting up the Mac?
—Alex
PS Please let
