Most systems with swappable Floppy/CDRom drives have the El Torito system for booting from a CDRom. Go through the BIOS again and carefully read the options. It may not say "CDROM" as the option but may say "REMOVEABLE DEVICES" or even something else. Look for a setting OTHER than Floppy and try each one. One of them may be the right one.
Now, that said, let's examine how you can get the OS installed should you discover that there really isn't any option that will work above.
This may be a difficult workaround, but could help you get the system installed.
1) Install Dos on the hard drive using Floppy disks. Now your Hard drive will boot. You will need to have the CD Rom driver for dos (
www.driverguide.com).
2) Boot to the Hard Drive and Copy the cab files from the CD to the hard drive.
3) Boot to a bootable floppy and install the OS from the hard drive being careful NOT to allow it to format the hard drive.