Yes. The reason being is that the B&Ws have a firmware block that prevents the processor from automatically being upgraded to a G4 (since they share the same motherboard as the early PCI G4 systems). You might be running in to trouble across the board with your upgrading - try doing the following:
* Install OS9 and completely upgrade it to 9.2.2
* Visit the Apple G3 support site:
http://www.apple.com/support/powermac/g3/
* Run the appropriate firmware updates:
http://docs.info.apple.com/article.html?artnum=31002 -- some of these can only be run under OS9.
* Run the firmware block removal program that should accompany your Sonnett G4 upgrade - this will be on a CD provided by Sonnet. You basically need to run the program, reboot while holding the "programmer" button, then let the update apply itself.
* After all this, then the G4 upgrade should boot correctly.
* Regarding the hard drive issue - the hard drive bus on the Blue & Whites is a little tricky, and tends to be related to what revision of the machine you're running. Honestly, it may be worth your while to not bother using the machine's bus at all (since it also only supports up to ATA/66 speeds) and buy a PCI IDE card that is ATA/100 and 133 capable. On my system (see below) I only use the secondary bus on the motherboard for the DVD drive - all my HDDs are running off of a PCI card.