Did some further testing of various hard drives.
I successfully formatted, installed VRM, installed AIX and booted the following drives, ST3144A, ST3283A, ST3491A, ST31240A. On the ST3283A the first format attempt failed but the second attempt was ok. Then I also tested a ST3850A which formatted OK, installed VRM on the second attempt and almost installed the OS. At two occasions I had LED blinking C6 02 with this drive. Perhaps the drive is flakey?
I also tested a couple of more modern drives. a 40 Gigabyte Seagate ST340016A and an IBM DJNA-351520. Both hang the VRM installer boot with error code 35 on the LED.
So all in all. Old IDE drives work. Newer do not. CF card do not either. I have no idea why.
I think I figured out why I failed to run the ISA IDE controller as secondary controller. I disabled the floppy but didn't set the floppy to the secondary address. I would guess that the address decoding logic is not taking this into account really. The hard disk is using 3F6/376 port and it was most likely clashing. Will make another test tomorrow with the ESDI controller as the primary controller and the ISA Multi-IO as a secondary IDE only. Floppy and all other peripherals disabled.