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I'm on the same motherboard. I installed Cartri's bios and the version of chameleon supplied with it. My extra extensions folder contains only fakesmc.kext and LegacyHDA.kext (with and older AppleHDA.kext in S/L/E) - otherwise a completely vanilla install. No need for com.apple.Boot.plist in /Extra. Everything works great. I too have 8 GIG ram. EDIT: Just saw your sig. You'll need a com.apple.boot.plist to boot into 32 bit mode due to your video card.
Initializing a volume does indeed format it. So if your machine says "this volume is unreadable - do you want to initialize it?", and you say yes, it will erase its contents. Real Macs don't have the Extra folder. That's why you'd want to move it to /Volumes/EFI - then your hard drive would be the same as one on a "real" Mac. If that's not important to you, you'll find keeping your Extra folder on / is less trouble to maintain.