Havok,
That was a good test on your part and am glad you had the MacOS 8.6 CD with which to test.
I can only answer your question in this way...OSX can be a problem on the Wallstreet in the way I spoke of earlier, nor does it appear that you have a hardware problem (except the dead backup battery) since Classic seems to run fine. I don't know if Apple made any changes to later versions of OSX which might mitigate this issue but 10.1.x was still an early release.
I also have a Wallstreet running 10.4.4 (via XPostFacto) and 9.2.2 and it seems to run just fine. However, I just tried booting into Open Firmware and booting to my OSX 10.1 CD...I was unsuccessful with both although I have been successful in the past. I did not pursue this by resetting PRAM and power manager but I will in the future. Also, when installing Jaguar 10.2 from CD, I was never ever to reboot to the just-installed 10.2 on the HD...it always started back up to the CD. My only solution was to pop open the CD tray after shutting down or during restart. So the Wallstreet is the least supported powerbook and this is partly or mostly due to Apple not wanting to optimize OSX on this "Old World ROM" machine. The following powerbook called the Lombard introduced New World ROM (ROM-in-RAM) where a lot of the hard code in the ROM chip was moved to software which loads at startup in a file called MacOS ROM and found in the System Folder.
You may wish to do this:
- Reformat your HD as one volume booting to your MacOS 8.6 CD and using the Drive Setup utility; by default, the MacOS 8.6 HD Driver is installed. Now install OS 8.6 (just the basic System Folder if you are not going to run any Classic apps) and then test performance.
- Download and replace your OS 8.6 Startup Disk control panel with the Startup Disk control panel from OS 9.2.1:
http://docs.info.apple.com/article.html?artnum=106225
Just go to your System Folder > Control Panels and drag the old Startup Disk c.p. to the Trash, then drag the new one into the Control Panels folder, close all windows and restart. It should work just fine with OS 8.6 although Apple is discussing using 9.x and OSX.
- Now install your OSX on the same volume and test.
By having both OS 8.6 and 10.1.5 on the same volume, you maximize your HD space for OSX; if the Wallstreet will only cold-start to OS 8.6, you should be able to select 10.1.5 in the Startup Disk control panel and restart to OSX...this should make life easier.
If you wish, you can format with OSX's Disk Utility instead of 8.6's Drive Setup...they both will do the same job. However, I do not recall if the 10.1 CD has the option of installing the MacOS HD Driver when reformatting; if not, use Drive Setup.
Having both Classic and OSX on the same volume (no partition) is perfectly acceptable; installing OSX first, then Classic, or vice versa is perfectly acceptable. But I would do 8.6 first, install the new control panel, then install OSX.
You could also partition with the first 7GB for OSX and the remainder for OS 8.6; this would allow you to always have a bootable partition in the event OSX went down. You can install a basic 8.6 System Folder (no apps) using approx. 150MB.