Not sure on the DragonDrive problems, do said VDKs work in the machine without the new PSU?
Some VDK's work fine usually small ones with 1 or 2 files. Large ones like Flex or OS9 fail or get stuck on track 0-2.
I really am not having much luck with the Dragons apart from reviving the 32. The Dragon drive is my second floppy controller as somewhere I have another floppy controller board which I used with a HxC drive but it also failed and I couldn't adjust it so got the Dragondrive.
As the 'designer**' of the new PSU board I'm perplexed too. My first instinct with the D64, would be to temporaly remove the Plus board and test as a stock 64. Though I don't see any reason why it should not work with a Plus equipped D64.
I have listed both machines separately on our local auction site. Assuming they don't sell (The reserve are what I would sell them for not low) I will probably do this next week. At the moment the new PSU is installed in the D32.
One thing that I just remembered is that I have a Drivewire unit here somewhere and a multi rom card so I could burn dos onto an eprom and try with the drive wire.