Hi Ben!
Hi Ben
My config.sys entry is a simple one; "IFS=Y:\IMB386FS\HPFS386.IFS /A:R" where "Y:" is the boot drive and "R" is the RAMDisk.
Is the "Y:\IMB386FS\" above a copy'n'paste typo?
Typo unfortunately. 
I tried it on two different installations on two different machines with the same error. 
I vaguely recall from the distant past, that HPFS386.IFS wouldn't load without some sort of memory restrictions... virtualmemorylimit adjustment or something like that. But I have that setting tweaked for other programs and I have no intention of changing it..
I take it that file system drivers, (*.IFS), can be loaded from anywhere not  just from config.sys path statements in the libpath, path dpath?
I guess that I have no choice but to use the basic HPFS.
So the HPFS386 module is not solely made up of the IFS and the INI files, there of course are a number of DLLs which make up the full solution.
Here is what I currently have in my \IBM386FS directory: 
Directory of G:\ibm386fs
10-29-17   7:07p     <DIR>           0  .
 4-19-18   1:25p     <DIR>           0  ..
 9-30-03   6:11p     25701         403  BOOTSH.EXE
 9-30-03   6:11p      1547         221  bsh.msg
 9-30-03   6:11p      3958         222  bshh.msg
 9-30-03   6:11p      3255         221  cac.msg
 9-30-03   6:11p      3497         222  cach.msg
 9-30-03   6:11p     27237         405  CACHE386.EXE
 9-30-03   6:11p     10804         224  DISKFT.SYS
 3-11-12   8:08p      2164           0  files_latest
 9-30-03   6:11p     10346         221  hfs.msg
 9-30-03   6:11p     33464         222  hfsh.msg
 9-30-03   6:11p      6845         404  HPFS386.DLL
 3-23-04  10:17a    259689           0  hpfs386.ifs
11-30-00   6:31p    259177           0  hpfs386.ifs.53_43
 9-30-03   6:11p    259691         225  hpfs386.ifs.53_44_15
 3-23-04  10:17a    259689           0  hpfs386.ifs.53_47
 4-17-18  10:49a     12232         268  hpfs386.ini
 8-30-14  10:42a      7154           0  hpfs386.log
 9-30-03   6:11p       462         225  hpfs386.txt
10-26-08  11:38a      1313          86  hpfsperf IP_8508.TXT
10-26-08  11:36a      8758          75  hpfsperf.cmd
 9-30-03   6:11p     39725         355  hva.exe
10-10-01   3:11p      7022           0  MAILSLOT.DLL
 9-30-03   6:11p      7020         405  MAILSLOT.DLL.53_43
 3-23-04   8:40p    363811          49  netapi.dll
 9-30-03   6:11p    348965         403  NETAPI.DLL.53_43
 3-23-04   8:40p    363811          49  NETAPI.DLL.53_47
 9-30-03   6:11p     23040         224  netapi.lib
 3-23-04   8:37p     63636          61  NETAPI32.DLL
 9-30-03   6:11p     63766         417  NETAPI32.DLL.53_43
 3-23-04   8:37p     63636          61  NETAPI32.DLL.53_47
10-10-01   6:44p      6588           0  NETSPOOL.DLL
 9-30-03   6:11p      6586         405  NETSPOOL.DLL.53_43
 1-01-13  10:51a     <DIR>        1037  newest
 1-01-13  10:51a     <DIR>        1144  original
 9-30-03   6:11p     26629         359  PREPACL.EXE
 9-30-03   6:11p      2081         255  readme.now
       38 file(s)    2583299 bytes used
                   3937073 K bytes free
Yeah, there are several versions listed there as a result of my previous work to narrow this configuration down to the most 'current' release.
Anyways, the IFS statement you show should be sufficient to load HPFS386. The HPFS386.INI file then brings specific controls into place, I've attached my version to the post for your review.
You certainly need the \IBM386FS to be present in your LIBPATH statement. I have it also included in the PATH and DPATH, not sure if this was necessary or not, but it seems to work fine here.
Further on, in your CONFIG.SYS you also need the following: 'CALL=G:\OS2\CMD.EXE /Q /C G:\IBM386FS\CACHE386.EXE >NUL', which will kick off the CACHE386 exec to, I believe, read in the HPFS386.INI definitions.
There are some issues you may run into, certainly the size of the HPFS386 cache has a lot to do with this. In the past, I used to run that cache as big as 500 Meg (only b/c the Win NTFS can run much bigger and I wanted to compare some things), but as more and more software piled onto my machine I had to bring this down. Currently I have this configured for 64Meg only, seems to work fine with VIRTUALADDRESSLIMIT=2560 in the CONFIG.SYS working fine. I have booted up the machine with VIRTUALADDRESSLIMIT=3072 as well w/o any problems.