Sounds like a bad HD to me as well. 75% of the time a bad OS access generates that type of behavior. I would try both the CD and Firewire drive methods mentioned above. I had a TiBook that had both the HD and CD ATA controllers fried, but it would still boot off of a firewire drive.

Check your ram as well too. While it wouldn't (typically) cause this kind of behavior, a good reseating will help make sure that isn't complicating things as well.

TBird