I put the Power Macintosh Upgrade Card into a Quadra 700 and formatted an external drive with Silverlining 5.6. The Quadra was in 68K mode when I formatted the drive. I installed the PMUC software on the external drive and set it as the startup disk. It started fine in 68K mode. I then set the Quadra to 601 mode, shut down and restarted. The Quadra booted but was really slow. I could watch each letter being drawn in "Welcome to Power Macintosh." I restarted and this time I got a system error in QuickTime Powerplug. I restarted again and this time got the Sad Mac error.
I connected the external drive to a Power Macintosh 8100/80. I used Silverlining 5.6 to reinstall the driver, leaving all the data intact. I took the drive back to the Quadra 700 and it now worked in both 68K and 601 mode. Based on this, it appears the problem is with Silverlining.
La Cie is aware of the situation and is working on a fix. There is no estimate as to when one will be available.