The MK1 IDE cables are rarely bad, if ever.

Try redoing the boot sequence a few times (2-3), and see if the lbasec=xxxxx values ever change from those you posted here earlier. If not, then the hard drive REALLY DOES have bad sectors, which can only be fixed by overwriting them. Easiest thing to try to overwrite them is to simply do a reinstall of the empeg software -- the v2final .upgrade file. That will fix it if the bad sects are in any of the important files.

Cheers