I am trying to find the leading asymptotic behaviours, using the method of dominant balance, about the irregular singular point $x=0$ for the equation $$x^4\frac{d^2y}{dx^2}+\frac{1}{4}y=0.$$
First let $y=e^{S(x)}, y'= S'e^{S(x)}, y''=[(S')^2+S'']e^{S(x)}$. Our equation then looks like $$x^4[(S')^2+S'']e^{S(x)}+\frac{1}{4}e^{S(x)}=0$$ which implies that $$x^4[(S')^2+S'']=-\frac{1}{4}.$$
We then make the assumption that $S'' << (S')^2$, allowing us to then say $$x^4(S')^2 \sim -\frac{1}{4}.$$
This then implies that $$S' \sim \pm \frac{i}{2x^2} \implies S \sim \mp \frac{i}{2x}.$$
We can see that $S'' \sim \mp \frac{i}{x^3}$ and $(S')^2=-\frac{1}{4x^4}$ which show our assumption to be true as $x \to 0$.
Now we assume that $$S(x) = \frac{i}{2x} + C(x), $$ where $C(x) = o(x^{-1})$.
Sub this into $$ S'' + (S')^2 + \frac{1}{4x^4} = 0 $$ to find $$ \frac{i}{x^3} + C'' -\frac{1}{4x^4}+\frac{i}{x^2}C'+(C')^2 +\frac{1}{4x^4} = 0. $$
After cancelling out and removing small terms we are left with $$ \frac{i}{x^3} + \frac{i}{x^2}C' \sim 0. $$
This then implies that $C \sim -\ln(x)$.
We then have that $$ S(x) = \frac{i}{2x} - \ln(x) + D(x),$$ where $D(x) = o(\ln(x)).$
Sub this into $$ S'' + (S')^2 + \frac{1}{4x^4} = 0 $$ to find $$ \frac{2}{x^2}+\frac{2i}{x^3}-\frac{2D'}{x}-\frac{1}{4x^4}+(D')^2-\frac{iD'}{x^2}+\frac{1}{4x^4}=0.$$
Again we cancel and remove very small terms to find $$\frac{2}{x^2}+\frac{2i}{x^3}-\frac{2D'}{x} \sim 0.$$
This then implies that $D' \sim \frac{1}{x} + \frac{i}{2x}.$
Hence, $D \sim \ln(x) + \frac{i}{2}\ln(x).$
Since this does not tend to $0$ as $x \to 0$ I figured I must continue with the process but the next stage gave me some very questionable results and I realised I didn't really understand what I was looking for or trying to achieve.
Any feedback on current work or clarifications on what I am supposed to be doing would be greatly appreciated.
You're doing the right thing, but remember that you're interested in the behaviour of $y(x)$ rather than $S(x)$: using your approximation, you should get that $$ y(x) = e^{S(x)} = e^{\frac{i}{2x} + \text{ln}(x)} = x\,e^{\frac{i}{2x}}, $$ for which $\lim_{x \to 0} y(x) = 0$. To check your approximations, it might be useful to know that the solutions to the original ODE are given by $$ y(x) = x\,e^{\pm \frac{i}{2x}}. $$