You have a memory error, specifically the RAM failed the Mod 3 test. See here:

http://www.mac512.com/macwebpages/sadmac.htm

RAM failure is not common in a stock 128K, but it is very common in an upgraded one due to loose or oxidized connections. When you take the back off, you may find someone has installed sockets and 512K of RAM, or there may be a 3rd party RAM expansion board.