The problem is that OS/2 needs some files to boot before it loads the HPFS driver and can see the files it needs. By trial and error (and by looking at the Install boot floppy, which provides most clues), I've come up with the following minimum OS/2 boot configuration which allows me to keep most of OS2 (including all of PM) on an HPFS partition (drive E: in my case). Here are my directories, and then I'll post my config.sys: