these are bad news.
I don't know what's going wrong there. You said your md5 checking program messages the file on CF card is ok; but it isn't working. Very odd.
Have you tried to format (FAT or FAT32) your CF card and copy only the "images" directory (with .gz & md5 files) and config.txt to it?
You haven't that much options to get ouf your trap.
Maybe the diagnostic message in log file is wrong?
Do you have "submit a ticket"? What does iRex say to content of logfile.txt?
"Booting from CF" is described in the official iRex file "Reflash from CF howto"
. It's more a draft than a noob's guide in the booting section. This could be a temporary solution.
Booting from CF is uncharted water for me. You should find somebody here who has done this already.