Two important settings in your configuration: on the 68k side of things JIT must
be disabled otherwise it messes up the memory layout when you get to PPC mode. Also, your total RAM allocation must come in at 1GB or less. The settings I'm using are 128MB Cyberstorm, 768MB Z3. Any more than that and the system freezes.
Edit: Attached is my configuration (7 zipped). Don't use it verbatim, just look at the settings. The four things you need to add to it for yourself are the Cyberstorm PPC ROM, the Amiga 3.1 A4000 Kickstart ROM, the installed hard file image of AmigaOS 4.1FE U1, and optionally the Picasso IV ROM. I'm not using the Picasso IV ROM. I installed in AGA mode and post-installation set up UAE graphics for 1920x1080 24-bit colour.
Edit2: The boot hard disk file can be about a maximum of 3900MB. Any larger than that and you will run into problems when you try to install AmigaOS 4.1FE (before you even get to the update). Note your drive order for the configuration inside of WinUAE. During installation your CD mapped image must
be unit 0. If a hard disk file is a lower unit than the CD drive then the system will try to boot from the hard drive and throw a "non-DOS" error and you are unable to continue. During installation, CD image is unit 0. After installation in my config you will see that I made the hard disk unit 0 and the CD unit 1, post-installation change. You can create additional hard disk files and they can be larger sizes, I had an 8GB one that worked fine, but as you can also see in my configuration I mapped a Windows folder to DH1: in emulation. Other settings in the configuration ensure that works as intended. This makes it easy to move files back and forth between your emulated Amiga and the host Windows file-system. Just put your Windows files in the folder or copy your Amiga files out of it.
Edit3: Here is a Guide
I wrote a while back. That linked post has SFS\0 instructions for the Smart File System. It's better than Fast File System in emulated systems. The files, like the monitor file that allows you to use UAE graphics in the emulated system, are an attachment in the first post. The first post installs in FFS instead of SFS. The overall tasks are pretty well the same you just need to make changes to them considering you're actually installing a A4000 Cyberstorm PPC system instead of a A1200 Blizzard PPC system. I wrote that guide a good while back now, with Update 1 Cyberstorm PPC is now the best hardware to emulate. Once installing on 3.4.1+ works for myself then I will likely write an updated full-guide revolving around that configuration.
Edit4: Don't run AmiUpdate to get Update 1. The emulated PPC doesn't have enough pre-U1 memory for AmiUpdate to do it properly. Instead, download Update 1 from your Downloads area, put it in the shared folder, extract it either from Windows (7-zip works) or in the Amiga environment, and run it from there. That works fine with only 128MB of Cyberstorm RAM.