Try creating a Universal or an LCIII specific boot hard drive (ie shove disk in an external enclosure) using another Mac. Then transplant and report. If the new disk fails, try reversing earlier mods until you find a failure point. The overclocking is hard to reverse so illiminate all other possibilities.

Have you tried the LCIII with different flavours of disk tools? try installing over LocalTalk rather than ethernet, using NAD?