Using the same System Folder to boot Classic and true OS 9 is not recommended, as Classic alters the System files in OS 9 to allow it o interact via OS X, rather than independently.

For example, such things as the TCP/IP settings are locked down by OS X, so that if you boot the OS 9 partition as true OS 9 you can't alter the LAN settings.

I suspect (and it's only a hunch) that Quicktime was modified to forward the output to the OS X video playback system, which would result in the computer hanging in true OS 9 as the Quicktime extension would be lost and confused.

Try a clean OS 9 install on another partition and see if that solves the issue.