I used the same, also on a PB1400c. True it seems there is a problem with 7.6.1, or it's with the HFS standard disk format.
The way I did it, used a 8Gb SD card, on a Mac running Mac OS 1.4, made 1 HFS+ partition for 8.6, 1 HFS standard for 7.6.1, and the rest of the SD unformatted cause I...