I have set up PC2Amiga to read the PC hard drive using my Amiga over a serial cable. However, when I try to copy files of any size it reports "cannot transfer packet".

This is caused through the baud rate being set to high. Try to experiment with your setup on different settings to see how high it can go without reporting errors. I found that 19200 is generally a good setting on different Amigas. Try connecting over a parallel cable as this will give you a faster transfer rate. It is recommended that you use a file manager, such as Directory Opus as this will increase the speed at which the directories are listed.