LOL - I think all issues are resolved!
I was able to boot off my A1200+ACA1221 Workbench 3.1 CF card without a problem in either the CFAUX or BOOT slots.
I then decided to swap my A1200 keyboard with my A500 keyboard, because if you remember I mentioned the Return key didn't work, but the Enter key works on my A500 keyboard.
Apparently if you F7 --> F1 and hit Enter, it won't install.
If you F7 --> F1 but hit Return -- it is now installing!
I used some air to clean out the ACA1221 card female card edge, and plugged it in and now everything is magically working! - I am booting off the BOOT slot, using a 68020 @ 28 MHz and all RAMs are showing. Now I just need to install the 8372A Agnus and get 1MB ChipRAM, and repair the return key..
Sorry for all of this trouble, it looks like it was all due to enter vs return on the keyboard, and maybe a combo of dirty ACA1221 slot+weak power supply.
Do you accept Paypal donations for your Model X fund? 
EDIT : Last question, if I did want to have the ACA1221 flashed with the ROM that allows the 42 MHz divider, what would the cost for that be?