E3 optimum settings for panning ?

I was reading with interest 4 days ago on the forum regarding the best set up for panning in shutter priority, C-AF burst mode to get the best results with moderately fast horses, dogs and motor sport cars.

As a person still finding his way arround the deeper menu's on the E3 thought I would try the settings someone suggested ie:-
Release priority to off
C-AF
ISO 100
normal size single spot focus
I.S. set to off
shutter priority
ESP meterring
Auto white balance
Focus lock set to ON

and a suggestion of a minimum shutter speed of 640 th.........this is with my newish 50-200mm SWD and firmware 1.4.......... Trouble is in normal lighting conditions @ 200mm (400) the minimum f3.5 aperture is allways flashing, so its calling for a adjustment either to the shutter speed or the ISO setting so my question is which, from experienced users in this mode, is the best compromise, for someone with a farely steady hand , or is I.S. mode 2 better than additional noise or motion blur ?

I did try an Auto ISO setting of 800 higher level with ISO 100 as the default but found when shutter button is pressed halfway and C-AF is activated the ISO is set at that point and does'nt change when the lighting changes unless finger is released from button and start C-AF again which of course takes what seems an eternity when tracking at speed, so, is there a setting I have missed ?
regards Davy