Yes, the CPU is full 32-bits, but the bus in a 386 SX is only 16 bit. Those PS/1's are such a cool piece of computing history!

https://en.wikipedia.org/wiki/I386#80386SX

The data bus was only 16 bits wide, but that doesn't really have much impact on OS compatibility; it just means that transferring a 32-bit value to or from memory takes two bus clock cycles instead of one. The address bus is only 24 bits wide, but that only affects physical memory address space; it still uses 32-bit pointers and a 32-bit virtual address space.

Oh sorry, a quick google check told me PS/1 had 286. 386SX itself should be supported, the monochrome Toshiba on the photo has 386SX/20 with 10MB RAM.

Anyway, I tried the 16bit version, and it works like a charm!! Thank you. Here's a video of the boot, I've just made. https://www.youtube.com/watch?v=1fSsTa8Oc48

Although, the floppy light does not turn off. Not sure, if this a problem with the OS or my hardware.