i never recomend to update bios, that is the last resource
if the upgrade bios process fails to complete the mainboard will end unusable
this is why i don't recommend to update and ask why you mention it
it doesn't matter if the bios is old or new, there is always bios updates but should be used only if required, the last option
"Going with 3.2 bfs. Is it supposed to leave the old kernel when installing, or will that be cleared upon reboot?"
synaptic just does what you ask it to do, if you ask it to remove old kernel, it will
you shouldn't remove it to keep it as a option if the new one doesn't work
all you have to do is open synaptic, press reload button, press search button and write kernel, from the results of the search install kernel 3.2.18 bfs
i don't know why you keep mentioning windows or why you tried to update bios, the problem here is the kernel and recent updates to pclinux, don't add all that information and steps, first things first