Error 5 just means your hard drive is unlocked. This means your hacked bios is not loading, becuase your hacked bios does not care if your drive is locked or not. But the MS dash does, so error 5 means the MS bios is booting and wants the drive locked. If you're not planning to play on xbox live anymore, don't worry about locking it.
The fact that you're sometimes booting to a slayers disk shows that you have a successful flash of a hacked bios. Most likely you just have a loose connection and need to reseat it. If you're mounting it with the pogo pins, you might try scraping D0 carefully with a razor blade to expose more copper and try reseating.
As far as the jumper settings, it depends on how the xbit was formatted. There are 6 different ways you can format the xbit -- (A single 2MB bank, .2x 512k banks and a 1M bank, etc. Use the X-BIT flash tool (linked below) to open your xbit and see how yours is formatted. The jumpers show which bank is active. You actually count from the bottom up, unless something changed. 1 is the bottom bank, so if chose option #6 for formatting (4x 256k banks, 2x 512k banks), then bank 1 is the bottom 512k bank, and bank 6 is the top 256k bank. Hopefully that will make sense when you launch the X-BIT.exe tool. The jumper options are showing in the X-BIT tool.
You might try softmodding - the ndure exploit. It's very easy these days, and if you boot to slayers and backup your eeprom.bin you can easily much recover/rebuild if anything happens. And no issues with the chip coming loose.
I uploaded the X-BIT flash toolhere
(not illegal code). Not sure how long it will stay on that hosting site, though. Sorry - I don't have any documentation
If you're going to continue to use the x-bit, you might try modding your bios with xbtool
so the Xbox logo is a different color when the hacked bios loads - an easy way to tell which bios is booting.