The pit needs to be encased in adamantine from every direction for this to be viable. You shouldn't breach the pit by accident. Of course, the shell can't be predictable lest it make it easy to chip away just the borders. Just enough so that you can't dig down into the pit without hitting adamantine at all
I don't think fully encasing the HFS in adamantite is necessary. The pit should be opened unexpectedly. First, canned evil is always Fun. Second, if the In Character knowledge of the dwarven civ might realize that there is adamantite there and saving/retaking the fort becomes priority (Reclaim with 200 dwarves makes sense in that case).
For the psycological attacks, I think there should be 3 stages:
1. (Within several region tiles of the HFS)A slightly strange feeling/mannerisms/paranoia that dwarves get just from being in the area.
2. (Adamantite found)More intense feelings along with greater violence, greed, hoarding, and thievery.
3. (Section of the HFS revealed)If the HFS is breached/revealed the worst levels of madness begin to manifest.
Level 1 should be almost unnoticeable until dwarves have been in the area for years.
Level 2 should still be subtle, but slowly get worse, but stay manageable.
Level 3 is slow madness, slowed to a crawl only by keeping dwarves several region tiles away from the HFS. Cured by only by cleansing the HFS, or being dragged to a safer fortress far away.
Some kind of HFS madness counter would probably be needed on each dwarf to keep track of their HFS exposure. The madness should eventually wear off, but extremely slowly. So even after cleansing the taint, a few dwarves may still go mad.