On my 390x, I've updated the BIOS to the most current version. and I'm running W2K SP4 on a 30GB hard drive. If you have a CD of XP SP2 or higher, you should look at UBCD. There are several diagnostic tools that I use professionally, though our "official" standards are a little higher my personal standards. For instance, on the Gateway I'm using for a music server, I "threw away" an IDE 120GB hard drive to my car that "failed" its bench test, but it's running XP Pro just fine and running our music and some video. It's all about your comfort level.
As for the "bad sectors" during format, I was getting the same error on a custom machine after getting the BSOD, and I was able to stick ithe drive in another machine and format, install, and run it just fine. I would even update the BIOS just to see if it doesn't renew your IDE controller. Nothing ventured, right?
I hope any of this is useful. I'm coming down from having just successfully replaced my 390X's miniPCI dial modem card with an Intel 2915ABG wireless card, so I'm a bit giddy.
I have a copy, basically, of your machine with a bad mainboard, so if you blow anything, let me know. I've already scrounged it for some parts, but I can see what I have that's good, should you need it. Unfortunately, I don't have my 390X's 12GB drive. It died, which is what forced the upgrade to the 30 gig. Try popping into your local "mom & pop" computer repair shops. You never know what they have. Also,
www.thinkwiki.org has spec sheets in *.pdf format. It's helpful for seeing what your specific type # originally shipped with. I'm guessing your machine was, in fact, using the PC66.
Even
www.crucial.com doesn't go back that far, but you never know what your local computer guy has in a dusty bin in the back. It's where I found my miniPCI wireless card. Of course, I got lucky with a wholesale lot from eBay for the antennae. If you can find a whole screen assembly, bezel and all, from a T4x (mine were from a T42), you have a perfect selection of antennae to use. PM me if you decide to go internal with the wireless, because there is some cutting involved. I can send pictures.
I hope this actually helps and isn't just a deluge of tidbits.