It's memory related. I've come across this before.
If the machine suddenly stopped working it could suggest that the RAM has got damaged. If there are two 128mb sticks in there, pull one out and try again, if that fails put back the one you pulled and stick in the other. (process of elimination)
When I came across it, underclocking the RAM worked throughout the installation and then could be clocked to its usual speed once installation was complete. However I feel that the RAM in your case may be damaged.
Aso someone suggested download memtest86 and see if its your RAM that is shonked, if so replace.