Intriguing…. I didn’t try the FTP server to tranfer them over. I wonder if that will show better success? My “To Do” for tonight 
I have another build I did with DIR Master; I’ll see if I can copy them from the D64 images instead of dropping them to the PC’s filesystem and see if that corrects it.
ok - file issue is resolved, but I am still seeing your observation of +SETUP trying to utilize to device 8 even though I have everything set to 12.
Closing issue, but tracking that system did not succeed with installation when operating a device other than 8 for boot. Changing IEC to drive 8 resolved issue.