I highly recommend plugging in a usb keyboard and pressing f1 when the 366 first turns on. This will load the bios configuration screen.
Go to Option C- "Motherboard Device Configuration" and the Option A- "IDE Configuration" and under "Boot Order Configuration" set all 3 to "NONE". And, on the same screen, set the "Flash Interface" under "Flash Configuration" to "Disabled".
Then enable the "Summary Screen Configuration" under the Option H- "Miscellaneous Configuration" from the home screen.
Finally, Option X- "Save Values and Exit".
Now, restart the device- it will stall on the summary screen. On the 4th line of the summary screen it should start with "Floppy A" followed by "Drive 80:"
Now, I think this where this http://forum.linuxmce.org/index.php?topic=6775.0
especially Thom's post here: "512 binary megabytes, (524,288,000 bytes)" makes the difference. The one that I can get Thom's image to flash onto says "Drive 80: 524", my other one in the same place says "Drive 80: 512". On this second 366, the image gets to 97% then says that it ran out of room.
So, if you're having similar trouble- I think the 512 vs 524 makes all the difference. I wanted a quick solution to the problem, so I bought a 1gb drive from PC Universe for about $23 shipped.