It's interesting that it hangs when booting from floppy as well.

It could well be a corrupted or damaged hard disk driver as that is one of the first things the system will load. If the driver is corrupted it would probably produce the kind of system hangs you're getting.

I'd try booting the machine with the hard disk fully disconnected (from SCSI cable and molex power connector) and try and boot it off floppy that way. If it boots okay without hanging, that's what it is.