Something is definitely not right here. 

Downgraded to Mac OS 8.1, Installed 2.0.3 as the original sellers specifications as he mentioned he was running it, and nope. Same Deal. Hard freeze at the progress bar. 

GRRRRRRRRRRRR...... 

Its almost as if the G3-L2 couldnt have ever worked in its lifetime?? 

guess ill return it.