I have a 701C runing a 3c589 (b or c) with 1.3 (I think it was
necessary to tweak the port space and irq space that you use to get it
to work.)  On the otherhand, I also have a new 3c562 in a 560X.  I
don't think the card started to work till 1.3D (and I'm not 100% sure
if the modem function works.)

One thing that worries me is what irq's are being used.  Using irq 3
for pcic is a BAD idea.  It is for modems and the hardware may not
be passing that interrupt if it feels that there is a modem device
there.  Secondly, you are using irq 7 for the sb.  I'm guessing that
this is wrong and you should use irq 5 (You have a 560E but I'll
bet that you also use irq 5).  So my best guess is that you are using 
irq 5 (since it is the lowest irq not spoken for) for the ep.  This
won't work because the hardware thinks that the sb uses irq 5 and
won't pass it.  Definitely try:
options        PCIC_ISA_INTR_ALLOC_MASK=0x8600

and possibly:
#options        PCIC_ISA_ALLOC_IOBASE=0x2a0
#options        PCIC_ISA_ALLOC_IOSIZE=0x060

in your config file.

I can do some more experiments when I get in to work.