Yes, you're right, of course. It is the PCMCIA slot and 8MB memory cards that are incompatible. I'm sorry, I had misread your post and thought your CF card was connected via PCMCIA.
I don't think that a fully working standard A1200 PSU can be causing your problems, so I am guessing that it's probably faulty. In which case the A500 4.5A PSU should do the trick.